The Future of Aircraft Maintenance in Australia: Workforce

Transcription

The Future of Aircraft
Maintenance in Australia:
Workforce Capability, Aviation Safety and
Industry Development
Final Report of Findings from
Australian Research Council
Linkage Project 110100335
October, 2015
The Future of Aircraft Maintenance in Australia
THE FUTURE OF AIRCRAFT MAINTENANCE IN AUSTRALIA:
WORKFORCE CAPABILITY, AVIATION SAFETY AND INDUSTRY DEVELOPMENT
REPORT OF FINDINGS OF ARC LINKAGE PROJECT 110100335
Final Report Authors: I Hampson, D Fraser, M Quinlan, A Junor, S Gregson
RESEARCH TEAM
Professor Michael Quinlan UNSW Lead Chief Investigator
Associate Professor Ian Hampson UNSW
Associate Professor Anne Junor UNSW
Dr Sarah Gregson UNSW
Professor Ann Williamson UNSW
Professor Garry Barrett University of Sydney
Dr Eric van Voorthuysen UNSW
Research Officer
Dr Doug Fraser UNSW
Research Assistants
Dr Tanya Carney
Kendrick Russell
PARTNER ORGANISATIONS
Australian Aerospace Limited
Aviation Maintenance Repair and Overhaul Business Association
Australian Licensed Aircraft Engineers Association
Australian Manufacturing Workers’ Union
Manufacturing Industry Skills Council (trading as Manufacturing Skills Australia)
Transport and Logistics Centre
TAFE NSW Industry Skills Unit and Southwestern Sydney Institute
Flight Attendants’ Association of Australia (Domestic)
Transport Workers’ Union of Australia
The research team express their profound gratitude to Partner Organisations for:
• Financial contributions to the study
• Consultation and advice
• Research collaboration and data gathering
• In-kind research support and data analysis, including secondment
• Assistance with survey distribution
• Technical advice
• Organisation of fieldwork
Various drafts of this Final Report have been circulated to, and discussed with, Partner
Organisations. They are the outcome of robust debate, both amongst the researchers and with
several Partners. The views expressed in their final form at some points may not reflect the
views of all Partners. The authors accept responsibility for errors and omissions.
business.unsw.edu.au
Executive Summary
In a nutshell
1. By 2025, there will be an estimated 30% global workforce shortfall in aircraft
maintenance capacity, with Australia and the Asia Pacific region particularly hard hit:
Australia has a both a strong need and excellent opportunity to help meet this shortfall
in the region.
2. This means moving quickly to rebuild both our aircraft maintenance and maintenance
training industries by 2020, to permit Australia to handle a high proportion of its own
needs across the civilian airline, general aviation and Defence sectors.
3. This is also a great opportunity to capitalise on our strong safety standards and high-end
maintenance capability by building a maintenance and training capacity, capable of
competing aggressively in the highest-value niches of the global market.
4. We must move to establishing a system of quality control safeguards, adequate to
guarantee that maintenance on Australian aircraft, whether done in Australia or
elsewhere, is carried out to best international safety standards.
5. Australian maintenance qualifications must be globally integrated through complete
alignment with International Civil Aviation Organisation (ICAO) and European Aviation
Safety Agency (EASA) training and licence standards; teething problems in the
introduction of the new licensing and training system must be quickly addressed.
6. Regional and General Aviation are essential national services and so the new small
aircraft maintenance licensing system must be quickly finalised, to ensure a nation-wide
supply of qualified staff to perform and sign off on repairs and overhaul.
7. Developing workforce capability and career paths to meet the impending maintenance
skills shortfall and develop a maintenance training export industry will require:
o The expansion of training both in the skills required to work on existing aircraft and
in innovative techniques for work on next generation aircraft
o Keeping as many as possible of the present generation of aircraft maintenance
engineers productively employed, and their skills and knowledge current, until local
market demand revives
o Reforming and rebuilding MRO training to ensure that a new generation of properly
qualified engineers will be available to replace the current one as it retires
o Harmonising training and career paths across sectors (Civilian and Defence; airline
and General Aviation) and between aerospace manufacturing and aviation.
8. To help develop the training capacity required to build an innovation-oriented aircraft
maintenance workforce, and to ensure that maintenance training makes a significant
contribution to Australia’s education exports, a National Aerospace/Aviation College
(NAAC) should be established, with nationally-networked branches in each state and
territory. It would draw on the combined resources of the university and TAFE sectors,
gain recognition as Part 147 category Maintenance Training Organisation, a Registered
Training Organisation and a nationally registered higher education provider, and have
support from aerospace and aviation industry employers for the in-depth provision of
practical skills training and experience.
9. A national Aircraft Manufacturing/ Maintenance Industry Forum or Working Group
needs to be established to advise on planning towards achieving these goals.
For recommendations, see pages xv to xviii.
i
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Executive Summary and Recommendations
Executive Summary – more detail
The Australian aircraft maintenance industry: Structure and trends
1.
The aircraft maintenance industry as a whole has been subject to significant
restructuring, the most important aspects of which have been an increase in outsourcing
and offshoring – particularly of labour-intensive heavy maintenance of wide-bodied
aircraft.
2.
Global third party maintenance, repair and overhaul (MRO) has grown into a AUD 84.4
billion industry. Its cumulative annual growth rate (CAGR) is expected to be 4.1% over
next 10 years, taking it past $AU 100 billion around 2024.
3.
Aircraft maintenance is classified into line, heavy, engine and components. While on
average labour accounts for 70% of the cost of maintenance, the labour component of
line maintenance is 75%; heavy is 55%, engine is 9%.
4.
The aircraft maintenance industry is embedded in both the airline industry and the
aerospace industry. Line maintenance is dominated by airlines. Half of heavy
maintenance is still performed in-house by airlines, while original equipment
manufacturers (OEMs) are already dominant in engines and increasingly offering “whole
of life” maintenance plans for their products – including whole planes.
5.
In addition, there are approximately 350 independent MROs in the domestic and general
aviation (GA) sectors and a significant range of civilian Defence contractors, specialised
aerospace manufacturing suppliers and firms providing professional services such as
modification design, testing and maintenance auditing services.
6.
Most of the international fleet is not old, and although the majority is maintained
overseas, a significant portion of it is still maintained domestically.
o There remains capacity for heavy maintenance of large aircraft that could be
reactivated, for example hangar space in Melbourne
o
Most of the small plane fleet is very old (67% older than 21 years), and not
technically complex. However, a significant portion of small aircraft is less than 10
years old, and some small planes are retrofitted with advanced systems
o
Thus, size is not an infallible proxy for technical complexity, and this poses
challenges for licensing and training alike, demanding maximum flexibility in
qualifications, skill sets, and group and type ratings.
7.
About half of single aisle domestic commuting aircraft are currently maintained
domestically, while heavy maintenance of the rest is offshored but could be repatriated.
8.
Aircraft used for regional Regular Public Transport (RPT) are maintained domestically,
and this maintenance sector is ripe for expansion.
9.
The large GA sector is critical to work across primary industry, tourism, scientific work,
surveillance, freight and essential services, requiring geographically dispersed
maintenance and maintenance approval services.
10. The aircraft maintenance workforce is difficult to measure, with the last reliable
estimate (2011 Census) being 14,489 aircraft maintenance engineers (AMEs), spread
across the defence and civilian sector.
11. A number of factors make the further development of an onshore maintenance industry
achievable:
iii
o
Onshoring will be facilitated technically by the changing nature of both line and
heavy maintenance requirements for next-generation wide-bodied aircraft
o
Major OEM subsidiaries have a significant footprint in Australia, and there is
significant number of innovative Australian aerospace manufacturing suppliers
o
A330 maintenance capacity has been kept onshore and provides a useful platform
for maintaining the A380 subsequently, as global maintenance skill shortages
emerge
o
Australia could capitalise on the convergence between Defence and civilian aviation
in usage of aircraft types.
12. Airports, with government support, have an excellent opportunity to take the initiative
in making Australia a regional service training hub for heavy maintenance and aircraft on
the ground (AOG) work in the emerging and maturing helicopter, regional jet and
business jet markets.
Safety oversight and offshoring
13. Risk is a combination of the likelihood that something will go wrong and the
consequences if it does. Statistically, main-route passenger aviation today is by far the
safest of all modes of travel, but the low probability of having an accident is balanced by
the high impact of those accidents which still occur
o In the post-war period, the numbers of fatalities rose till 1980, then began a slow
decline to the present low incidence – despite the very large increase in the volume
of air travel
o
However, substantial risk still does exist. The Australian Transport Safety Bureau
(ATSB) reports a 90% rise in “incidents” in commercial aviation, and a 135% rise
over the decade for high capacity RPT
o
In RPT accidents, 70% of passengers die.
14. The accident rate for GA and charter has risen to three times that of RPT in 2011. Rotary
wing aircraft in turn have a higher rate than fixed
o The rate of “serious incidents” (i.e. near misses) in GA is increasing
o
This increase could reflect factors specific to Australia, given that the corresponding
rates in the US are decreasing.
15. Between 8–10% of accidents and incidents are related to maintenance, and its
contribution to accidents involving particular systems is higher – for example,
maintenance is a direct contributory factor in 30%, and a latent factor in 23%, of
accidents involving landing gear failure.
o Accidents usually have multiple causes, including “latent” factors such as poor
training, procedures and supervision
o
There is evidence of an increase in maintenance related accidents
o
Because of the relatively low rates of accidents, one of the greatest risks is
complacency, and the tendency to emphasise commercial over safety
considerations
o
The example of an aircraft breaking up 20 years after a poorly repaired tailstrike
illustrates that to prevent accident preconditions “lining up”, no legally required
safety check can be dismissed as “redundant” or “gold-plating”.
iv
16. Outsourcing increases risk, which derives from the need to coordinate across multiple
organisations in a supply chain. Known risk factors – are
o Organisational and cultural dysfunction (the “Pressure, Disorganisation, Regulatory
Failure” thesis)
o
Work intensification and long working hours; use of unqualified and inadequately
trained workers; use of unauthorised or “rogue” parts which have not been
properly checked; longer intervals between checks
o
“Overreaching” – growth of demand for air travel, and production of aircraft, raises
demand for maintenance, which depends on a supply of trained and licensed
engineers and this may not always be met.
17. Evidence is provided in Chapters 6 and 7 that we cannot be confident in the safety
oversight and hence in the work quality of all offshored maintenance:
o The air operator gives up much of the control over the maintenance of its planes
o
Outsourcing creates a number of “agency” problems, endemic to contractual and
time-bound and time-pressured arrangements. These can cause under- or overservicing
o
Much of our evidence of quality problems in some offshore maintenance facilities
used by some Australian airlines came from teams of inspectors who were sent over
with the “first wave” of offshoring (2006–09) — eg “scribe lines” (small scratches
that can become cracks) — but no longer carry out that function
o
There appears to have been a declining presence over time of CASA (Civil Aviation
Safety Authority) inspectors on the shopfloor of overseas MROs.
18. The 2014 Aviation Safety Regulation Review (ASRR) expressed concern about CASA’s
domestic safety oversight, but omitted to investigate the regulation of offshore
maintenance:
o ASRR noted a worldwide shift in the nature of safety oversight and inspection from
direct inspection of workplace processes and systems, to the documentation of
process and auditing of workplaces’ safety management systems
o
The International Air Transport Association (IATA) also noted this trend with
concern in its 2013 Safety Report, which insists that MRO certification is not a
guarantee of work quality
o
ASRR advocated a “trust but verify” approach — but CASA may be trusting too
much and verifying too little
o
It is now difficult to have confidence in the international system of safety oversight
based on the 1944 Chicago Convention.
19. The various arms of International Civil Aviation Organisation (ICAO) regulation are
somewhat at cross-purposes, producing a “regulatory tangle” with some lack of clarity as
to who bears the responsibility for regulatory oversight of offshored maintenance:
o Article 31 and Annex 8 affirm that the safety oversight of offshored maintenance is
the responsibility of the state of registry, yet Article 33 of the Convention allows, or
arguably even requires, each country to accept the regulatory arrangements of
another country – provided they meet or exceed ICAO minimum standards
o
Article 33 and Article 31 rely on the Universal Safety Oversight Audit Program
(USOAP), based on ICAO inspection and rating of member countries’ compliance
with ICAO standards, and their ability to ensure safety oversight, but since 2009, the
v
USOAP has been replaced by a “continuous monitoring approach”. (Australia was
last audited in 2008.)
20. There are thus issues requiring resolution in the current trend to cede the safety
oversight of Australian registered planes to the national aviation authorities of another
country, including through Bilateral Aviation Safety Agreements (BASAs):
o According to ICAO, CASA is responsible for the safety oversight of offshored
maintenance. Yet CASA also effectively devolves “offshore” its responsibility for
oversight and Parts 42 and 145 of the new Civil Aviation Safety Regulations (CASR)
assume that the offshore approval process is identical with the onshore one
o
In response to concerns about the safety of offshored maintenance, the US Federal
Aviation Administration (FAA) has intensified safety oversight of offshored facilities.
Australia does not appear to be following suit
o
If CASA is going to approve overseas facilities, it needs to rely on its own inspectors.
There is a need to intensify the inspections of offshore maintenance facilities. Yet,
as the recent Aviation Safety Regulation Review found, the training of CASA’s
inspectors in latest safety management systems (SMS) auditing techniques is
lacking.
The Civil Aviation Safety Regulations (CASR) suite of maintenance
regulations
21. The new “suite of maintenance regulations” – the CASRs 42, 66, 145 and 147 – have
introduced potential safety risks that need to be addressed. In particular it will be
important to:
o Ensure clarity around the certifying role of the LAME, by removing use of
ambiguous terms like “certifying employee”
o
Prevent shifting risk from CASA to other actors in the aviation system – notably
training providers and employers.
22. There is a need to safeguard the status of licensed aircraft maintenance engineers
(LAMEs) under ICAO Annex One, as agents of the state, fulfilling a socially protective
role, where this comes into tension with their obligations to their employer. This tension
may involve disagreement over when an aircraft is “safe to depart”, or when an
imperfection becomes a defect:
o The new CASRs seek to implement a version of the EASA system. But the EASA
system is designed to “paper over” tensions between conflicting approaches to
“sign off”. Some constituent countries prefer a company-approval system, rather
than a state-based licensing system. Ambiguities allowing for both remain in the
regulations, and some of these have been reproduced in the CASRs
o
ICAO Annex One makes it clear, however, that the role of the licence holder is to
certify for the safety of stages of maintenance, as well as to release the plane to
service following maintenance
o
To the extent that Annex One allows for an alternative “company approval” system
(with no license) this is permissible only where “certifying employees” hold
qualifications and experience equivalent (to the Annex One licence holder)
23. The new part 66 licensing structure replaces a system that suited Australia’s
circumstances (especially the way in which it provided for career mobility across the GA
and RPT sectors) with one based on the system developed by the European Aviation
vi
Safety Agency (EASA), but which also departs from it in significant respects. The
following discrepancies need to be resolved:
o EASA B licenses require Diploma level qualifications – Australia’s former CAR31
regulations set AME qualifications at Certificate IV level, supplemented by targeted
category knowledge and type training
o
Controversially, a new category “A” licence holder qualified at Certificate II level,
can perform limited tasks in line maintenance, and release a plane to service. In
Australia, the Category A licence is attainable at a far lower level of training and
experience than in other “best practice” countries, notably the UK. It may not be
ICAO compliant
o
Part 42 requires a new organisational form, the Continuing Airworthiness
Management Organisation (CAMO), to plan maintenance work for the part 145
organisations which perform it. While it is designed to ensure clear lines of safety
accountability in which responsibility cannot be delegated, some concern has been
expressed that in practice there may be increased risk of miscommunication across
organisational silos.
24. CASR Part 145 requires organisations to assume greater responsibility than before for
the competence of their AMEs, potentially sharing liability for licenses and qualifications.
Company approvals are not transferable:
o
Clarification is required to ensure that these requirements do not undermine the
responsibilities of LAMEs in a way that may compromise safety.
25. The new system gave rise to many transitional problems, including lack of clarity around
licence privileges: resolution of remaining issues must be a priority:
o Many holders of the new licences have faced “exclusions” – their licences were
deemed “partial”
o
Initially, licences were not recognised overseas, even in Europe. To gain full B level
licences, licence holders have had to undergo further training and/or assessment,
often very costly and involving travel
o
One consequence has been difficulty, during the transition period in securing
overseas recognition for Australian qualifications and licenses.
26. EASA B licences apply to the large planes in the RPT sector. A separate licence was
thought to be needed for the small plane GA sector. Defining the structure of this licence
has been a perennial problem, including for EASA itself, which has not resolved the
issue:
o The present proposal for a Small Airplane Licence (SAL), underpinned by a
Certificate IV qualification, would divide the occupation into two sectors and
impede mobility. It is based on a presumed equivalence between size and
complexity that does not hold, in that some small planes are, or have, technically
complex systems suitable for type ratings.
27. Qualifications underpinning the career path should provide flexibility to
o Enable work and sign off on small, non-complex aircraft (suited to the group
system) but also small aircraft with technically complex systems more suited to type
ratings
o
Enable smooth progression from Certificate IV to Diploma, with appropriate prior
standing
vii
o
Allow the addition of SAL as a category rating to a B licence, in a way similar to the
former CAR30 Group system.
28. The ASRR recommends that the CASR 1998 regulations be re-written in a plain language
“third tier”. The very act of doing so would force to the surface the lack of clarity in the
regulation.
Training
29. An emerging global shortfall of appropriately trained and licensed engineers means that
Australia will have to rely on its own capacity to meet this need.
30. In Australia, training capacity has declined below its replacement level:
o The numbers in training in 2013–14 were the lowest since statistics have been
available
31. The introduction of the new licensing system has imposed a load on the training system:
o The qualification required for a B licence is now a Diploma (formerly it was a
Certificate IV). But state governments almost uniformly have refused to fund the
1000 hours difference between the Certificate IV and the Diploma, or even to fund
the cost of exclusion removal training and assessment
o
Only 176 commenced a Diploma in 2012–14, and only 39 had completed, with 37
still in training. 97.6% of apprentices are studying for Certificate IV.
32. Aircraft maintenance licensing training is regulated by CASA (under CASR part 147) as
well as by ASQA (the Australian Skills Quality Authority). It is subject to regulations that
sometimes conflict. Type training is performed in part 147 organisations, and is not
regulated by ASQA.
o ASQA, requires “mutual recognition” – a RTO must recognise qualifications issued
by another RTO. This cuts across CASA’s requirement that only part 147
organisations deliver competencies for licensing purposes
o
According to the CASR Part 66 Manual of Standards (MOS), the pass mark for
category modules must be 75%, yet “mutual recognition” requires that RTOs/MTOs
grant prior standing to certificates of attainment from non Part 147 organisations
(which can have a pass mark of 50%).
o
Competency based training (CBT) as the central “language of capability” in the
Australian Training System has been variously interpreted. The issue has been
particularly acute in developing and assessing paraprofessional and technician level
skills, such as those required for the B licence
o
For units of competence requiring knowledge and diagnostic skills beyond trade
level, such as those covering advanced troubleshooting, there is a need to specify
the high-level theory required, and to ensure adequate training in and assessment
of diagnostic skills
o
Because CBT specifies performance standards and assessment criteria, its role is not
to mandate training curriculum. The relevant Industry Skills Council has provided
guidance material on curriculum content and advisory material on how to set up
assessments, for example of the performance of diagnostic tasks that require the
application of advanced theoretical understanding. But the use of such material is
not mandatory.
viii
o
It has been difficult to date to ensure compatibility across RTOs/MTOs in achieving
the common standard of theoretical knowledge specified in the CASA syllabus (Part
66 MOS) as overlaying each unit of competency.
33. The training and licensing system should accommodate Defence as well as Civilian
personnel – Defence personnel usually work on different aircraft, and have different sign
off procedures which do not involve licensing or require a Diploma:
o Before the 1990s, there were five aircraft maintenance trades. After a “reform”
process, there were three, and a common non-competency-based curriculum
(NAC95) across Defence and Civilian training.
34. The ICAO Training Manual has been the basis for international standards around
training, and it contains – specified in detail – knowledge, skill and experience
requirements, complete with levels of proficiency and numbers of training hours
deemed necessary to attain them. Australian training appears to be falling short of the
requirements specified in the ICAO training manual as well as in EASA regulation.
o Funded hours sometimes fall short of ICAO as well as EASA requirements
o
Some training providers question the effectiveness of the encoding of theoretical
material in competency standards, and efforts to do require the support of
guaranteed hours and curriculum and assessment resource materials, aligned to
European approaches to competence
o
There appears to be a trend to neglecting experience for licensing purposes – with
experience rolled into the overall assessment of “competence”.
35. International aviation training, including maintenance, appears to be in the midst of
considerable reform – ICAO’s “Next Generation of Aviation Professionals” (NGAP)
program is an example. Although this program uses the terminology of CBT, it means
something different by the term – notably, a complete “training process” as specified by
Instructional Systems Design (ISD) methodology.
36. Currently there is a process of reform in the Australian training system. The possibilities
this raises for progressive reform should be seized.
Australia and the emerging MRO skills shortage
37. Authoritative international sources – IATA, ICAO, Boeing, CAVOK – make clear that the
aviation world is heading into a global crisis in the supply of skilled and licensed
personnel. This will make it difficult if not impossible to keep up current standards of
maintenance on its fleet.
38. Calculations of shortfall have been made for this study, based on the following
assumptions:
o Each region roughly maintains its own fleet
o
A 1:3 ratio of “certificated” (i.e. licensed) AMEs to non-certificated ones
o
12–14 AMEs per plane across most regions
o
Any significant reduction in total maintenance demand from addition of more
technically advanced planes is a decade off.
39. The world maintenance workforce in twenty years’ time will need to be around twice
the number employed in the base year for each set of forecasts.
ix
40. Virtually all of this workforce – not just the net increase – will need to be recruited and
trained from scratch over this period. There is therefore a need for regions to upgrade
their training systems to increase output.
41. The biggest shortfalls are expected to arise in precisely those parts of the world
(Southeast Asia) to which Australian carriers are increasingly turning to meet their
maintenance requirements. This is already happening.
42. Shortages of skilled labour in these regions will necessarily affect both their capacity to
take in work from countries like Australia, and the prices they will be able to charge in
what will progressively become a seller’s market – as well as potentially the quality of
that work.
o In the medium term, this is bound to mean a compression of the cost differential
between performing maintenance in Australia and outsourcing it; eventually it
could undermine much of the economic case for offshoring Australian work
o
It could also force Australian airlines to offshore work to “second tier” MRO
suppliers of dubious quality, if Australia lacked its own capacity.
43. Australia will face a genuine threat to the safety of its domestic aviation unless it is able
to rebuild sufficient capacity to handle at least a reasonable proportion of the work
which has been lost overseas.
44. Can Australia make up the gap? There are no official forecasts. Nevertheless:.
o An examination of the training sector’s performance in the last 5 years indicates
that swift turn-around action is required
o
There has been a recent severe decline in training activity and output relative to
historical levels: for the March quarter the number of commencements in 2014 was
the lowest this century and the third-lowest in the 20 years for which statistics are
available
o
Yet it seems inevitable that Australia will eventually have to take back a significant
part of the maintenance load which is currently either already offshore, or in the
process of being moved offshore.
45. Australia still could regain a substantial slice of work currently done overseas. However,
doing so would require a coordinated strategy that included:
o Combining the capabilities of civilian and defence training facilities
o
Managing the level of wastage within the civilian training system
o
Serious investment in new training and retraining.
46. If Australia is to be in a position to seize the opportunities offered by the skills crisis, a
major effort will need to be made now.
Aircraft maintenance — Future role in regional development, trade,
security and innovation
47. Overseas studies of the economic impact of the aviation industry, based variously on the
impact of airports, of new manufacturing and maintenance facilities, and of the General
Aviation sector, typically indicate that:
x
o
Each new job creates up to three other jobs, and each dollar of output creates two
more dollars’ worth of output elsewhere in the economy. Conversely, the scaling
back of operations has a commensurate negative ripple effect
o
Government subsidisation of new airports or manufacturing/maintenance facilities,
through infrastructure and incentives, is more than returned in tax revenue.
48. Investment in new aircraft maintenance capacity, as an integral part of investment in the
development of the aviation and aerospace industries, will yield four sets of benefits:
o Regional development: regional economies will be stimulated, the viability of
smaller regional centres will be restored, and essential services and supply lines to
remote communities will be kept intact
o
Economic development and trade: Australia’s national income can gain greatly
through maintenance self-sufficiency and through export of MRO training and
services. A range of OEMs are using Australia as the lynchpin of their operations in
the world’s fastest-growing aviation sector. There are significant new niches into
which Australian maintenance can move, including technology diagnostics and
aircraft on ground services; advanced manufacturing and precision engineering
supply chains; maintenance and upgrades of fleets including helicopters, business
jets and very fast turboprops for the emerging Asia-Pacific market
o
National security: Civilian contractors to the Australian Defence Forces play a key
role at the developmental and non-routine end of MRO work, in the continuum
between MRO, OEM and Tier 1/Nadcap accredited supply chain work. Defence
project work fosters the development of specialist and innovative techniques,
enhancing national technological self-sufficiency
o
Innovation: In the new relationship among air operators, OEMs and MROs, Australia
can capitalise on the nimbleness offered by integrating R&D, manufacturing, and
afterservice maintenance in a design/make/deliver/ maintain/repair/recycle model.
In fields such as automation/robotics, “big data” management, biomaterials,
nanotechnology, molecular precision, flexible fabrics, and the creation of light
cheap high quality parts, Australia potentially has a strong role in the Asian century.
49. The interconnections between aviation and aerospace tend to be based on the role of
airports as hubs of maintenance activity, linked to clusters of surrounding manufacturing
activity, which in turn are integrated into national, Asia-Pacific and in some cases global
aviation/aerospace supply chain networks:
o
The relationship between Williamtown and Hunternet is an example of a
collaboration between state and local government, airlines and the RAAF.
Significant regional multiplier effects have been traced to the network of small and
medium engineering and technology firms supplying MRO operations. Innovation
stimulus includes a program to promote STEM study in local schools
o
The Queensland government has actively promoted thar state as an aviation hub.
The Brisbane Airport Master Plan provides for expanded maintenance facilities and
maintenance training, with State government funding support. As well, the
Queensland Government has promoted regional aviation/MRO clusters, for
example the joint Defence/civil facility at Townsville, and the Asia-Pacific market
oriented Australasian Aviation Group – Cairns (AAG-C)
o
Both Victoria and South Australia have specialised civilian/Defence supply networks
based on advanced manufacturing, while Melbourne houses the large OEM-linked
Boeing Aerospace Component Repairs facility
xi
o
Badgerys Creek offers the opportunity for developing state-of-the-art MRO
capacity, linked to nearly civilian and Defence facilities and based on a Western and
Southwestern Sydney network of over 100 aviation and aerospace-linked firms and
OEM branch offices. These include Airbus Defence/civilian maintenance activity
o
A more sustained national approach however is required, to meet emerging
opportunities in the Asia-Pacific region. It will be necessary to build on emerging
hubs, clusters and supply chain networks, draw in under-utilised infrastructure and
workforce capability, and create new capacity.
A way forward
50. In order to turn the impending shortfall of skilled aircraft maintenance engineers into an
industry development and export opportunity, all sectors of the aviation and aerospace
industry need to be engaged in a conversation to develop a Strategic Aircraft
Manufacturing/Maintenance Industry and Workforce Development Plan, covering all
civilian and Defence aviation sectors, and innovative manufacturers. Most immediately,
strategies are required for:
o Rebuilding sufficient domestic MRO capacity by 2020 to permit Australia to handle a
high proportion of its own requirements
o
Establishing a system of quality control safeguards adequate to guarantee that
maintenance on Australian aircraft, whether done in Australia or elsewhere, is
carried out to best international safety standards
o
Ensuring that as many as possible of the present generation of L/AMEs remain
productively employed, and their skills and knowledge are kept current, until such
time as market demand revives in Australia.
More generally and in the longer term, planning needs to address approaches to:
o
Building a new domestic MRO industry capable of competing aggressively in the
highest-value niches of the global market
o
Reforming and rebuilding MRO training to ensure that a new generation of properly
qualified L/AMEs will be available to replace the current one as it retires
o
Developing the interface between the aviation, aerospace and MRO industries ,
and between civil and Defence aviation maintenance, in order to facilitate the
transfer of technical innovation
o
Building a leading role for the Australian maintenance industry in aviation and
aerospace innovation, globally and in the Asia-Pacific region.
51. To develop a strategy for the future of the industry an Aircraft Manufacturing/
Maintenance Forum or Working Group, should be established. It should receive seed
funding from, for example, the Industry Skills Fund, and government funded secretarial
support:
o The Forum should include employer and employee organisation representatives
from the following sectors: air operators, independent MROs, manufacturers of
aircraft systems/components, and aeroskills training providers, as well as
representation from Australian Defence Force aviation. It is also important that
small and medium enterprises, whether innovative manufacturers or GA MROs, be
well-represented
o
Such a body should serve as a consultative planning mechanism, identifying needs
and avenues for future aerospace/MRO industry. It should interface closely with the
xii
new Industry Reference Committee and Skills Service Organisation structures
currently in the process of being established
o
Its role would include the monitoring of emerging workforce development needs,
and skills planning, for new intakes, for skill upgrades and skill and career transitions
in aerospace-related advanced manufacturing and engineering, aircraft
maintenance and maintenance management
o
The Forum should provide an umbrella for strategic planning Working Groups,
whose priority task would be to build a multi-faceted but integrated maintenance
and maintenance training capability that is both nation-wide and export-oriented
o
The Forum should also function as a clearing-house for information of strategic
importance to workforce development.
52. One approach to providing the training capacity to rebuild national aeroskills and career
paths, and to ensure that maintenance training makes a significant contribution to
Australia’s education exports, would be to establish a National Aviation/Aerospace
College (NAAC):
o This National College should consist of networked local branches in each state and
territory and draw on the combined resources of the university and TAFE sectors,
linking existing and new providers
o It should have recognition as Part 147 category Maintenance Training Organisation,
a Registered Training Organisation, and a nationally registered Higher Education
Provider
o It should provide quality-assured programs allowing for career pathing through
qualification structures that provide for smooth progression between advanced
manufacturing, aeroskills, licensed maintenance, engineering specialisations and
maintenance management roles
o It should offer qualifications that are fully compatible with the international (EASA
and NGAP) protocols, in order to attract international enrolments, playing a
significant role in educational exports to meet the coming Asia-Pacific aeroskills
shortfall
o
It should bring together the capabilities of civilian and Defence training facilities,
and make greater provision for group apprenticeships, to provide new trainees with
the diversity of workplace experience needed to create the flexible and versatile
workforce required by the coming decade of transition
o It will be necessary to ensure support from aerospace and aviation industry
employers for intensive shopfloor practical skills training and experience.
xiii
xiv
RECOMMENDATIONS
Ways forward– Chapter 12
•
RECOMMENDATION 1: That a new Aircraft Manufacturing/Maintenance Industry Advisory
Forum be established, with Federal Government infrastructural support, to provide a
clearing-house for industry information and to act as a participatory planning body to
support the transformation of the MRO and MRO training industry, as part of the broader
civilian and Defence aviation and aerospace industries.
With membership to include representatives of the relevant civil and Defence industry
sectors, CASA, Skills Service Organisations, training authorities and providers, and frontline employees, this forum be tasked with generating proposals for a coordinated
approach to meeting national, rural and regional aircraft maintenance needs and to
identifying areas of competitive advantage for establishing Australia as a significant
exporter of specialist maintenance and maintenance training nationally and in the AsiaPacific region.
•
RECOMMENDATION 2: That a priority task of the new Forum be to interface closely with
the new Industry Reference Committee and Skills Service Organisation structures currently
in the process of being established. One of its roles would be to facilitate a consultative
process for the development of a workforce plan for the new expanded industry, including
a review of current job classifications and training arrangements to facilitate mobility of
skilled labour and portability of qualifications across the different sectors.
Industry development initiatives – Chapter 11
•
RECOMMENDATION 3: That Commonwealth and State governments and the industry
(including Defence establishments and contractors) work towards a coordinated strategy,
with attached incentives as appropriate, to repatriate as much as possible of the heavy
maintenance currently being carried out offshore before the skills crisis begins to the curtail
the options.
•
RECOMMENDATION 4: That Federal and State/Territory Governments adopt the
recommendation of the 2014 NSW Parliament Legislative Council Inquiry into Regional
Aviation Services, that regular passenger transport services in regional Australia be seen as
an essential service, and that a dedicated grant/loan fund be established to assist local
government authorities to support the consolidation of MRO services.
•
RECOMMENDATION 5: That the Aircraft Manufacturing/Maintenance Industry Advisory
Forum and those developing Airport Master Plans, including those working on the Badgerys
Creek Second Sydney Airport, plan for precincts that will attract clusters of MROs,
maintenance training providers and OEMs, networked to aerospace manufacturing and
engineering providers.
This will facilitate the role of airports as hubs linking air operators, MROs, research and
development (R&D), advanced manufacturing and the export of maintenance training.
Overseas evidence (Ch 11) suggests that multiplier and catalytic effects on local
economies repay government developmental support several times over in revenue
returns.
xv
Regulation of offshore maintenance – Chapter 7
•
RECOMMENDATION 6: That a review be undertaken of Australia’s safety oversight of
offshored maintenance, having regard to the diminished effectiveness of the international
regulatory system in detecting and discouraging unsatisfactory practices
This review should examine the extent to which the current ICAO regulations provide
clarity and certainty around the safety oversight of offshored maintenance, and should
form the basis of recommendations for new quality assurance mechanisms that can be
applied either within, or additional to, the current international scheme. The review
should note the inconsistencies in ICAO regulation, the evident violations of good safety
practice that have emerged in the course of this research, and the precedent set by the
FAA in negotiating a “trust but verify” model of mutual recognition in its agreement
with EASA.
•
RECOMMENDATION 7: That air operators increase their own safety oversight of offshored
maintenance, with CASA playing a greater role in the inspection of offshored maintenance
facilities to which it has issued Part 145 approvals. The increase in inspection frequency and
intensity should be funded by the offshoring air operators, on a full cost-recovery basis.
•
RECOMMENDATION 8: That CASA be required and funded to build its capacities for
inspection, specifically in terms of the number of inspectors and their training in the latest
auditing techniques.
Licensing reform – Chapter 8
•
RECOMMENDATION 9: That Australia reaffirm its commitment to state-based licensing as
the most effective mechanism for ensuring independence and quality in aircraft
maintenance certification, and remedy any loopholes in the existing regulation which permit
its substitution by a company authorisation scheme.
•
RECOMMENDATION 10: That the interactions between the Fair Work Act and the Civil
Aviation Act be examined with a view to resolving the conflict revealed by the Sunstate
decision in a way that safeguards the statutory independence of the licence holder.
•
RECOMMENDATION 11: That the issue of international transferability and mutual
recognition of qualifications and licences be explored and resolved at both the national and
the intergovernmental level, including urgent action to ensure that Australian licences are
genuinely equivalent in their knowledge content to those issued by EASA and other
jurisdictions which have adopted the same model, and negotiation of bilateral recognition
arrangements (with appropriate safeguards) where these do not currently exist.
•
RECOMMENDATION 12: That the parts of the CASRs relevant to maintenance licensing be
rewritten in plain language as recommended by the Aviation Safety Regulation Review, with
a view to resolving ambiguities in key terms which are a potential source of confusion and/or
conflict between interest groups.
•
RECOMMENDATION 13: That the minimum qualification requirement for an A licence be set
at the same minimum level as required by best-practice EASA members (i.e. Certificate III),
and that this licence become part of an articulated progression of licence categories built
around a common training framework and qualification structure.
•
RECOMMENDATION 14: That the arrangements for a new small aircraft licence be finalised
as quickly as possible in order to permit GA operators and MROs to recommence recruiting
xvi
for LAME vacancies, but in a way that allows a seamless pathway between small aircraft and
RPT aircraft, while making provision for licensees to train in and be endorsed for new small
aircraft technology as it comes into wider use.
This should include provisions for smooth transition from Certificate IV to Diploma, group
category endorsements which could be added either to a Diploma-based B licence or to a
Certificate IV-based SAL, type ratings for selected small planes, and an exercise to rate all
small planes (including retrofitted ones) for licensing purposes in terms of their technical
characteristics and associated maintenance skill sets.
Training – Chapter 9
•
RECOMMENDATION 15: That appropriate funding be made available to support exclusion
removal for those partial B licence holders who wish to recover their former potential
productivity by regaining a full B licence.
•
RECOMMENDATION 16: That institutional and funding measures be put in place as a matter
of urgency to ensure that the 98% of apprentices currently studying for a Certificate IV
qualification have a readily accessible option on completion to upgrade to the Diploma
required for a licence.
•
RECOMMENDATION 17: That a National Aviation/Aerospace College (NAAC) be set up,
drawing on the combined resources of the university and TAFE sectors, to take carriage of
the training of Australia’s aircraft maintenance engineers, to provide career paths to and
from advanced aerospace manufacturing - and to provide a commercially attractive vehicle
for an export industry in aircraft maintenance training and qualifications.
That this College consist of nationally-networked local branches in each state and
territory, including both civil and Defence aviation education and training providers, and
gain recognition as a Part 147 category Maintenance Training Organisation, a Registered
Training Organisation and a nationally registered higher education provider. It will be
necessary to ensure support from aerospace and aviation industry employers for a new
model of shopfloor practical skills training and experience.
•
RECOMMENDATION 18: That the training structure for AMEs be redesigned to provide for:
o
o
o
A curriculum-based approach which is compatible with the international (EASA and
NGAP) protocols and reflects the work already done in Australia on a common
civilian/defence syllabus;
Expert and independent oversight/moderation of the assessment process; and
Closing the current loophole in the VET regulations that allows non-category training
to provide prior standing for category training.
Pending the establishment of the NAAC, that the current constraints of the VET
framework be relaxed for this occupation to the extent required to make these reforms
possible, in recognition of the major public safety implications of having a properly
qualified aircraft maintenance workforce.
•
RECOMMENDATION 19: That the training package be reviewed to create a broader base of
capabilities (possibly based on a common first year) allowing trainees to specialise in either
traditional MRO or the expanded industry, as well as providing avenues for early-career
AMEs who find themselves temporarily surplus to requirements to move into related
occupations (e.g. automotive mechanics or aluminium shipbuilding) with minimal retraining.
xvii
Addressing the coming maintenance workforce shortfall – Chapter 10
•
RECOMMENDATION 20: That an emergency initiative be funded to restore the number of
apprentices in aircraft maintenance engineering at least up to replacement level.
•
RECOMMENDATION 21: That in view of the near certainty that the world faces a serious
shortage of qualified aircraft maintenance engineers, the occupation be restored
immediately to the Skilled Occupations List.
•
RECOMMENDATION 22: That immediate action be undertaken to identify the reasons
behind the current level of wastage within the civilian training system and increase the rate
of on-time completion.
•
RECOMMENDATION 23: That incentives be provided to airlines and MRO providers to retain
experienced L/AMEs in productive employment, pending a spontaneous recovery of the
labour market, in order that Australia should continue to have a basis of expertise for
training and mentoring the next generation of skilled workers.
xviii
Table of Contents
In a nutshell ....................................................................................................................................... i
Executive Summary – more detail................................................................................................... iii
RECOMMENDATIONS ..................................................................................................................... xv
List of Figures................................................................................................................................ xxiii
List of Tables ................................................................................................................................. xxiv
Abbreviations ................................................................................................................................ xxv
Chapter 1 Introduction ..................................................................................................................... 1
1.1 Thematic overview ................................................................................................................... 1
1.2 Towards a new MRO model ..................................................................................................... 2
1.2.1 First signs of a transition: the current Australian MRO environment ................................ 4
1.3 Key findings............................................................................................................................... 4
1.3.1 Is there a future for aircraft maintenance in Australia? ...................................................... 4
1.3.2 Do safety problems still exist for Australian aviation? ....................................................... 6
1.3.3 What are the safety concerns that affect maintenance? .................................................... 7
1.3.4 Can Australia meet its future labour supply requirements? ............................................... 9
1.4 Limitations of this study ......................................................................................................... 10
1.5 Structure of the report ........................................................................................................... 11
Chapter 2 Background and Historical Survey ................................................................................. 13
2.1 Introduction ............................................................................................................................ 13
2.2 Definitions............................................................................................................................... 13
2.3 Background ............................................................................................................................. 14
2.3.1 The global MRO industry ................................................................................................... 14
2.3.2 Future growth predictions ................................................................................................. 16
2.4 Retrospect and prospects ....................................................................................................... 18
2.4.1 Three decades of change in the global industry ................................................................ 18
2.4.2 Stocktake: Offshoring, onshoring and new relationships: The Australian experience ...... 20
2.5 Conclusion .............................................................................................................................. 23
Chapter 3 The Australian MRO Industry ........................................................................................ 25
3.1 Introduction ............................................................................................................................ 25
3.2 Industry overview ................................................................................................................... 25
3.2.1 Air operators ...................................................................................................................... 25
3.2.2 Third party MROs ............................................................................................................... 26
3.2.3 Aircraft OEMs, component OEMs and tiers of manufacturers .......................................... 26
3.2.4 Aviation business and professional services ...................................................................... 27
3.3 The demand side – a mapping of Australian aircraft and air operators................................. 28
3.3.1 Counts of civilian aircraft, classified by weight and age .................................................... 28
xix
3.3.2 Estimates of intensity of aircraft use................................................................................. 34
3.3.3 Australian Air Operator Certificate holder maintenance strategies ................................. 35
3.4 The supply side – a mapping of the Australian MRO industry ............................................... 40
3.4.1 Stand-alone MROs ............................................................................................................. 41
3.4.2 MRO work performed by OEMs: aerospace manufacturing and aviation industry linkages ... 43
3.4.3 Perspectives of MRO managers, particularly in the GA sector ......................................... 45
3.5 The MRO workforce ............................................................................................................... 46
3.5.1 Numbers and capabilities .................................................................................................. 46
3.5.2 Career mobility and skill transfer within and across aviation and aerospace sectors ...... 47
3.6 Conclusion .............................................................................................................................. 51
Chapter 4 Safety Issues 1: The Dimensions of the Problem .......................................................... 53
4.1 Introduction ........................................................................................................................... 53
4.2 What the statistics tell us: Accident numbers........................................................................ 55
4.3 What the statistics tell us: Accident rates .............................................................................. 57
4.4 The problem of small numbers .............................................................................................. 62
4.5 The role of maintenance ........................................................................................................ 63
4.6 Conclusions ............................................................................................................................ 65
Chapter 5 Safety Issues 2: Where do the risks lie? ........................................................................ 67
5.1 Two kinds of accident............................................................................................................. 67
5.2 Known risk factors .................................................................................................................. 72
5.3 Independent assessments of risk factors ............................................................................... 75
5.4 Conclusions ............................................................................................................................ 76
Chapter 6 Offshored Maintenance and Safety .............................................................................. 79
6.1 Introduction ........................................................................................................................... 79
6.2 Agency and information problems in contract maintenance ................................................ 80
6.3 Evidence of quality problems in offshored maintenance ...................................................... 82
6.4 Jurisdictional issues and the need for effective regulatory oversight ................................... 86
6.5 Conclusion .............................................................................................................................. 88
Chapter 7 Regulation and Safety Oversight of Offshore Maintenance ......................................... 91
7.1 Introduction ........................................................................................................................... 91
7.2 The international system of safety oversight......................................................................... 92
7.3 Australian regulation of offshore maintenance ..................................................................... 95
7.4 Pushing the limits in both directions: the US experience ...................................................... 99
7.5 Is there a solution? ............................................................................................................... 103
7.6 Domestic regulatory options ................................................................................................ 105
Chapter 8 The New Suite of Maintenance Regulations: Issues of Safety Oversight.................... 109
8.1. Introduction ........................................................................................................................ 109
8.2. The role of the aircraft maintenance engineer licence holder ........................................... 109
xx
8.3. Reforming the maintenance suite of regulations ................................................................ 114
8.3.1 Part 66: Moving to EASA harmonisation ......................................................................... 114
8.3.2 Background – The CAR 31 licensing system..................................................................... 116
8.3.3 The EASA/CASR reforms to the licensing system ............................................................ 117
8.4 CASR reforms to continuing airworthiness........................................................................... 119
8.4.1 CAMOs – Continuing airworthiness management organisations .................................... 119
8.4.2 AMOs - Approved maintenance organisations ................................................................ 120
8.4.3 The “Specialist Maintenance” controversy ..................................................................... 122
8.5 Implementation issues ......................................................................................................... 124
8.5.1. Clarity .............................................................................................................................. 124
8.5.2 Restrictions, exclusions, privilege gaps and training gaps ............................................... 124
8.5.3 Overseas recognition ....................................................................................................... 126
8.6 General aviation and small aircraft licensing (SAL) .............................................................. 127
8.7 Discussion and conclusions................................................................................................... 129
Chapter 9 Training and Licensing Reform: Implications for Workforce Capability Development133
9.1 Introduction .......................................................................................................................... 133
9.2 A decline in training capacity ................................................................................................ 134
9.3 Training reform in Australia — implications for aircraft maintenance ................................ 137
9.3.1 General background......................................................................................................... 139
9.3.2 Aircraft maintenance training and assessment ............................................................... 140
9.4 Competency-based training (CBT) in aircraft maintenance ................................................. 142
9.5 The changing face of aircraft maintenance training............................................................. 143
9.5.2 Training and licensing under CAR 31 ............................................................................... 144
9.5.3 The impact of CASR Part 66 ............................................................................................. 145
9.5.4 Shifting liability and challenges to quality: CASR Parts 145 and 147 ............................... 146
9.6 Australian aircraft maintenance training and international standards ................................ 147
9.6.1 Approach to making international comparisons ............................................................. 147
9.6.2 Is our CBT their CBT?........................................................................................................ 149
9.6.3 Is Australian training still ICAO-compliant? ..................................................................... 152
9.7 A reform agenda for aircraft maintenance training in Australia .......................................... 152
9.8 Conclusion ............................................................................................................................ 153
Chapter 10 Australia and the Emerging World MRO Skills Crisis ................................................. 157
10.1 Introduction ........................................................................................................................ 157
10.2 Estimates of future skill demand ........................................................................................ 157
10.3 Calculating Australia’s future requirements....................................................................... 163
10.4 Could Australia make up the gap? ...................................................................................... 168
10.5 Conclusion .......................................................................................................................... 177
xxi
Chapter 11 Aircraft Maintenance – Future Role in Regional Development, Trade, Security and
Innovation .................................................................................................................................... 179
11.1 Establishing impact, benefits and costs ............................................................................. 179
11.2 Aviation/aerospace - hubs, clusters or networks?............................................................. 181
11.3 Regional development ....................................................................................................... 183
11.4 Trade balance: National self-sufficiency and export potential .......................................... 185
11.5 Security............................................................................................................................... 186
11.6 Innovation .......................................................................................................................... 188
11.7 Capitalising on the potential contribution of MRO to the aerospace/aviation industry . 188
11.8 Implementation – A new aircraft manufacturing/maintenance industry strategy ........... 192
Chapter 12 Conclusion: Findings, General Recommendations and Priorities ............................. 195
12.1 Introduction ....................................................................................................................... 195
12.2 The long transformation: maintenance industry diversification ....................................... 196
12.3 Offshoring and safety ......................................................................................................... 200
12.4 Licensing and reform of the suite of maintenance regulations ......................................... 202
12.5 Training............................................................................................................................... 204
12.6 A priority: Strategic aviation/aerospace industry and workforce development ............... 207
12.7 Steps to creating and implementing the industry workforce development strategy ....... 208
12.7.1 A National Aviation/Aerospace Industry and Workforce Development Strategy ........ 208
12.7.2 An Aircraft Manufacturing/Maintenance Industry Forum ............................................ 209
12.7.3 A National Aviation/Aerospace College (NAAC)............................................................ 210
12.8 Conclusion .......................................................................................................................... 211
Appendix 1 Methodology ............................................................................................................ 213
A1.1 Research aims and design .................................................................................................. 213
A1.2 Methods and outcomes ..................................................................................................... 213
Appendix 2 Required Hours of Training and Experience under International and Australian
Regulatory Structures .................................................................................................................. 223
A2.1 Do funded training hours in the Australian system match international standards? ....... 224
A2.2 How much theory content is mandated in Training Packages? ........................................ 226
Appendix 3 Case Studies of Potential Aviation, MRO and Aerospace Clusters ........................... 229
References ................................................................................................................................... 239
xxii
List of Figures
Figure 2.1 Total world value of MRO by segment, 2015-2025 (AUDb., constant 2015 values) ..... 17
Figure 3. 1 Strategic linkages – Australian aircraft maintenance industry and its relationships ... 25
Figure 3.2 Five-year renewal rate (%) by category ......................................................................... 33
Figure 3.3 Categories with highest percentages of aircraft less than ten years old ...................... 33
Figure 3.4 Categories with highest percentages of aircraft over 20 years old............................... 34
Figure 3.5 Emerging industry locations of MRO work.................................................................... 51
Figure 4.1 Fatal aviation accidents (over 60 yrs) and number of fatalities (over 20 yrs) to 2014...... 56
Figure 4.2 Aviation accidents per million departures — Australia and worldwide, 2004-12 ........ 58
Figure 4.3 Aviation accidents per million departures by sector, 2002 - 2011................................ 60
Figure 4.4 Accidents and near misses by aviation sector, 2003 - 2011.......................................... 60
Figure 4.5 Fatal Accidents per million departures, general and commercial aviation, 2001-2011 ..... 61
Figure 9.1 AME apprenticeships by status, 12 years to December 2014 ..................................... 135
Figure 9.2 Apprentices in training by sector, average per year, 10 years to December 2014 ..... 136
Figure 9.3 Loss as a proportion of number in training, by sector, 10 years to December 2014 ....... 136
Figure 10. 1 Survey responses on expected impact of maintenance labour shortage ............... 160
Figure 10. 2 Alternative estimates of combined labour demand to 2033 ................................... 168
Figure 10. 3 All AME apprenticeships by status – rolling 4-qtr average, 10 yrs to March 2014 ...... 169
Figure 10. 4 Apprentices in training by sector, rolling 4-qtr average, 10 years to March 2014 ...... 169
Figure 10. 5 Change in size of Australian AME workforce, 2011-2019 ........................................ 172
Figure 10. 6 Four scenarios of civilian workforce growth, 2015-2025 ......................................... 174
Figure 10. 7 Civilian workforce growth under two high-investment scenarios ........................... 176
Figure 11.1 Potential benefits of aviation/aerospace hubs, clusters and networks .................... 181
xxiii
List of Tables
Table 3.1 Commercial fixed-wing fleet on CASA register, August 2015, by age ............................ 29
Table 3.2 General Aviation fixed wing aircraft in the CASA register, Aug 2015, by category and age . 31
Table 3.3 Helicopters on CASA register, August 2015, by MTOW, configuration and age ............ 32
Table 3.4 Aircraft aged <5 years in August 2015, by category....................................................... 32
Table 3.5 Changes, monitored volume of annual aircraft movements, Australian airports, 2006- 2014 . 35
Table 3.6 Main operators of aircraft >100,000 kg MTOW, by maintenance strategy, Aust, 2015. ... 36
Table 3.7 Aircraft 50,001-100,000 kg MTOW: Operator & maintenance provider, Aust, 2015. ... 37
Table 3.8 Examples -regional RPT operators, Australia, 2015. ...................................................... 38
Table 3.9 CASA-approved organisations, May 2015 ...................................................................... 41
Table 3.10 Stand-alone MROs, Australia 2014 .............................................................................. 42
Table 3.11 Organisations undertaking maintenance/aviation/aerospace activities, Aust, 2014 .. 44
Table 3.12 Career pathways – Australian maintenance engineers surveyed 2012 ....................... 48
Table 3.13 Sectoral mobility – Australian maintenance engineers surveyed 2012 ....................... 50
Table 8.1 Licence groups under the CAR 31 system .................................................................... 117
Table 8.2 Frequency of licence combinations, survey of AMEs and LAMEs, Aust, 2012–2013 ...... 125
Table 10.1 Estimates of future world demand for qualified AME labour.................................... 158
Table 10. 2 Estimated average annual training requirement & shortfall by region, 2011-2030 ..... 161
Table 10. 3 Supply of qualified aircraft maintenance labour, Aust, relative to ICAO benchmarks . 166
Table A1.1 Panel survey responses by state/territory, compared with 2011 Census distribution . 215
Table A1.2 Wave 1 and Wave 2 survey respondents - Employment status ................................ 215
Table A1.3 Employment location – survey respondents Wave 1 ................................................ 216
Table A1.4 Wave 1 & 2 survey respondents – Aviation job by employment status, 2012 & 2014 . 217
Table A1.5 Interviews and focus groups conducted, 2011-2014................................................. 219
Table A2.1 Training hours required & proportion of training that is theoretical, EASA/ICAO, 2003 . 224
Table A2.2 Australian aircraft maintenance training qualifications - Nominal hours……………… 229
Table A2.3 Mapping exercise —correspondence between EASA modules and ICAO Chapters . 225
Table A2.4 Hours comparisons, selected EASA/CASR modules ................................................... 226
Table A2.5 Alignment between CASA licensing syllabus and Aeroskills units of competency .... 228
Table A3.1 Aviation/aerospace cluster — Western and South-Western Sydney ........................ 229
Table A3.2 Aviation/aerospace cluster — Queensland – Regional/rural .................................... 231
Table A3.3 Aviation/aerospace cluster — South Australia - All ................................................... 233
Table A3.4 Aviation/aerospace cluster — Melbourne and environs (includes Avalon) .............. 235
Table A3.5 Aviation/aerospace cluster — Western Australia – All.............................................. 237
xxiv
Abbreviations
AAG-C
Australasian Aviation Group - Cairns
ABC
Australian Broadcasting Corporation
ABS
Australian Bureau of Statistics
ACT
Australian Capital Territory
ADDIE
Analysis, design, development, implementation and evaluation
ADF
Australian Defence Force
AEI
Air Engineers International
AHMS
Australian health monitoring systems
AIU
Airline Industry Update
ALAEA
Australian Licensed Aircraft Engineers Association
AMC
Acceptable Means of Compliance
AME
Aircraft maintenance engineer
AMO
Approved maintenance organisation
AMROBA
Aviation Maintenance Repair and Overhaul Business Association
ANAO
Australian National Audit Office
ANTA
Australian National Training Authority
ANZSCO
Australia and New Zealand Standard Classification of Occupations
ANZSIC
Australia and New Zealand Standard Industry Classification
AOC
Air operator certificate
AOG
Aircraft on ground
APBC
Australia Philippines Business Council
APMA
Australian Parts Manufacturing Approval
AQFC
Australian Qualifications Framework Council
AQTF
Australian Quality Training Framework
ARSA
Aeronautical Repair Stations Association (United States)
ASF
Australian standards framework
ASQA
Australian Skills Quality Authority
ASRR
Aviation Safety Regulation Review
ATC
Air Traffic Control
ATO
Approved training organisation
ATSB
Australian Transport Safety Bureau
AU
Australia
xxv
Abbreviations
AWD
Airworthiness Directive
AWN
Airworthiness notice
AWPA
Australian Workforce Productivity Agency
A&P
Airframe and powerplant
BACR
Boeing Australia Component Repairs
BASA
Bilateral aviation safety agreement
BOAC
British Overseas Airways Corporation
CAA - AU
Civil Aviation Authority (Australia)
CAA - UK
Civil Aviation Authority (United Kingdom)
CAE
Centre for adult education
CAGR
Compound annual growth rate
CAMO
Continuing airworthiness management organisation
CAR
Civil Aviation Regulations
CASA
Civil Aviation Safety Authority (Australia)
CASA RIS
Civil Aviation Safety Authority Regulatory Impact Statement
CASA RRP
Civil Aviation Safety Authority Regulatory Reform Program
CASR
Civil Aviation Safety Regulations
CBT
Competency based training
C-E
Communications - Electronic Solutions
CIV
Certificate IV
CLAMOR
Coalition to Legislate Aircraft Maintenance Outsourcing Reform (United
States)
CMA
Continuous monitoring approach
COAG
Council of Australian Governments
CRS
Certifying for release to service
DEEWR
Department of Education, Employment and Workplace Relations
DER
Designated Engineering Representative
DIRD
Department of Infrastructure and Regional Development
DOTARS
Department of Transport and Regional Services
EADS
European Aeronautic Defence and Space Company
EASA
European Aviation Safety Agency
xxvi
EEC
European Economic Community
ETS
Emissions trading scheme
EU
European Union
FAA
Federal Aviation Administration (United States)
FARs
Federal Aviation Regulations (United States)
FBO
Fixed Base Operator
FIFO
Fly in fly out
GA
General Aviation
GAMA
General Aviation Manufacturers Association
GAO
Government Accountability Office (United States)
GDP
Gross domestic product
GFC
Global Financial Crisis
HAECO
Hong Kong Aircraft Engineering Company Ltd
HAESL
Hong Kong Aero Engine Services Ltd
HRO
High Reliability Organisation
IATA
International Air Transport Association
Ibid.
The same
ICAO
International Civil Aviation Organisation
IFE
In flight entertainment
IOSA
IATA Operational Safety Audit
IR
Industrial relations
ISC
Industry Skills Council
ISD
Instructional systems design
ITQI
IATA Training and Qualification Initiative
JHAS
John Holland Aviation Services
LAME
Licensed Aircraft Maintenance Engineer
LCC
Low cost carriers
MEA
Manufacturing and Engineering - Aeroskills
xxvii
Abbreviations
MOS
Manual of Standards
MRO
Maintenance Repair and/or Overhaul Organisation
MSA
Manufacturing Skills Australia
MSD
Multi-site fatigue damage (to an aircraft)
MTO
Maintenance Training Organisation
MTOW
Maximum take-off weight
NAA
National Aviation Authority
NAC
National Aeroskills Curriculum
Nadcap
(derived from) National Aerospace and Defence Contractors Accreditation
Program
NCO
Non-Commissioned Officer
NCVER
National Centre for Vocational Education Research
NDI
Non Destructive Inspection
NDT
Non Destructive Testing
NGAP
Next Generation of Aviation Professionals
NPA
Notice of Proposed Amendment
NPRM
Notice of Proposed Rule Making
NQC
National Qualifications Council
NTB
National Training Board
NTRA
National Training Reform Agenda
NTSB
National Transportation Safety Board (United States)
NZ
New Zealand
OECD
Organisation for Economic Co-operation and Development
OEM
Original Equipment Manufacturer
OIG
Office of the Inspector General (United States)
PMA
Parts Manufacturing Approval
PNG
Papua New Guinea
PMD
Per million departures
PO
Partner organisation
PRI
Performance Review Institute
PTB
Pacific Turbine Brisbane
PwC
PricewaterhouseCoopers
R&D
Research and Development
xxviii
RAAF
Royal Australian Air Force
RAAP
Rural Airport Access Program
RA-Aus
Recreational Aviation Australia
RIS
Regulatory Impact Statement
RO
Research objectives
RPL
Recognition of Prior Learning
RPT
Regular Public Transport
RQ
Research question
RTO
Registered Training Organisation
SADIG
Sydney Aerospace and Defence Interest Group
SAL
Small aircraft licensing
SAR
Singapore Aviation Regulation
SARP
Standards and Recommended Procedures
SCM
“Swiss cheese” model
SD
Standard deviation
SEWRSBERC
Senate Employment, Workplace Relations, Small Business and Education
References Committee
SIA
Singapore Airlines
SIAEC
SIA Engineering Company
SME
Small or medium enterprise
SMS
Safety management systems
SOE
Schedule of experience
SRM
Structural repair manual
SSP
State safety program
SASCO
ST (Singapore Technologies) Aviation Services Co.
ST Aerospace
Singapore Technologies Aerospace
STP
Standardized Training Package
STARCO
Shanghai Technologies Aerospace Company Limited
SWSI
South West Sydney Institute
TA
Technical Agreement
TAA
Trans- Australia Airlines
TAFE
Technical and Further Education
TDG
Training development guide
TSA
Transportation Safety Administration (United States)
xxix
Abbreviations
TWU
Transport Workers Union of America
UAV
Unmanned aerial vehicle
US
United States
USOAP
Universal Safety Oversight Audit Program
VET
Vocational Education and Training
VH-
Australian aircraft registration prefix
xxx
Chapter 1 Introduction
1.1 Thematic overview
This project was conceived in 2009 to address a number of issues which had arisen as a result of
recent losses of Australian aircraft maintenance jobs, particularly in the airline sector. Thus the
project’s first aim was:
•
To estimate the short, medium and longer term supply of and demand for aircraft
maintenance engineers (AMEs) 1 and licensed aircraft maintenance engineers (LAMEs)
authorised to return planes to service after maintenance, and to identify causal factors
influencing the match between requirements and supply.
The project also arose from perceived quality issues linked to maintenance carried out by
offshore contractors on Australian-registered aircraft, as well as perceived weaknesses in the
safety oversight system. Thus a further aim was:
•
To investigate the links between offshoring and maintenance quality, including safety.
•
In the years leading up to the start of the project, there had been a shortage of
Australian maintenance engineers and the occupation had been a migration skill in
demand. It was therefore deemed important to identify ways of guaranteeing an
ongoing local supply of highly skilled AMEs and LAMEs. Retention of this workforce,
once recruited, was also seen as important. The project therefore sought to explore the
roles of training and licensing, workplace skill development and recognition and careerpathing in ensuring continuity of skill supply. Concurrently, the industry was
experiencing a significant supply impact from a new licensing system, introduced with
the stated aim of aligning Australia and European licensing standards, but accompanied
by a lack of clarity in the transition. Further aims were therefore:
•
To investigate AME/LAME access to skills/qualifications development and possible links
to (a) safety and (b) LAME retention,
•
To identify any consequences flowing out of the implementation of the new licensing
scheme for aircraft maintenance engineers.
In addition, the research was intended to look ahead and identify new and as yet unexploited
prospects for the growth of a viable Australian maintenance, repair and overhaul (MRO)
industry. Specifically, the final objective was:
•
To investigate the potential for a sustainable MRO industry and aeroskills training
industry in Australia, and to estimate their benefits and the opportunity costs of not
investing in them, by reference to overseas practice and taking account of Australian
policy conditions.
Over the time it has taken to complete the research, the aviation industry, both in Australia and
across the world, has been in a phase of particularly rapid evolution. As the research proceeded,
it became obvious that the project had opened up a complex set of changes operating at the
interfaces between technological advancement, regulatory reform and decay, work
1
The term “maintenance engineer” dates back to pre-war British usage, where “engineer” generally
meant a trades-level worker. AMEs in Australia hold trade or more recently technician qualifications, and
need to be distinguished from aeronautical and aerospace engineers, who are university-trained and play
different roles in the industry.
1
organisation, and an unpredictably shifting political and commercial environment at both global
and national levels. The technological changes alone can be expected over the next 10–15 years
to produce major shifts in the structure and boundaries of the MRO industry and the nature of
the work done in it, and in consequence the work of many AMEs is likely to look very different at
the end of the period from the way it has up to now. We discuss this changing model of MRO in
the next section.
Quite apart from the scope and diversity of the change processes involved, the pace and
direction of change remained highly unpredictable through a period when the global aviation
industry was subjected to major stresses, airline business models evolved rapidly, diverging and
re-converging in the process, new technologies and products apparently reached the verge of
commercial takeoff only to see their markets contract again in line with the unexpectedly falling
price of aviation fuel, and the international regulatory model which had governed safety in
commercial aviation throughout the world began to unravel. During the years in which the
research was undertaken,
•
Average world airline profitability fell to as low as 2.5 US cents per passenger carried and
returned to 3–4 times that level;
•
Australian airlines virtually abandoned the international routes to Europe which they
had once pioneered, effectively outsourcing their services on these commercially
important routes to much more powerful codeshare partners;
•
Qantas moved within the space of little over a year from approaching the
Commonwealth government for substantial financial and/or regulatory assistance to
ensure its survival, through to recording a massive turnaround in profit; and
•
The number of aircraft maintenance apprenticeship commencements in Australia
peaked sharply in 2008 at one of its highest points ever, only to fall by 2014 to the
lowest point since records have been kept.
Because of this unexpectedly complex and unpredictable environment, the main part of the
report has tended to shake out into a number of more or less independent sub-reports, each
likely to appeal to a different primary readership. Predictions of future developments in the
industry needed to be revised several times as a result of new developments in the course of
writing up the research. The report should be seen primarily as a snapshot of the industry and of
its expected future development over the period when it was finalised – roughly between
December 2014 and October 2015 —and as building a baseline and a justification for continuous
updating through new research.
1.2 Towards a new MRO model
The most visible change over the last five years is that outsourced aircraft maintenance,
originally viewed within Australia purely as a cost-saving measure and a source of additional risk,
now appears widespread throughout the global aviation industry. Growth in the contract MRO
industry has spread across many parts of the world. It has been marked by increasing
specialisation which increases its competitive edge over in-house maintenance. Only a handful
of airlines still take direct responsibility for all their own maintenance, and one of the two
conglomerates which currently dominate commercial passenger aviation in Australia has never
had a significant onshore heavy maintenance capability.
Aircraft MRO has become a highly profitable global industry with strong growth prospects. From
an Australian perspective, it has become increasingly important for local businesses to achieve
competitiveness in this global industry and adapt Australia’s valuable resource of world-class
maintenance skills to the new business environment. What began as a threat has progressively
metamorphosed into an opportunity, albeit one which will not fall easily into Australia’s hands.
2
Chapter 1 - Introduction
This is not to suggest that the dangers have been resolved, but over five years it has become
possible to define them much more precisely, and above all to see that they are not linked
purely to the single trend of offshore sourcing, particularly of wide-bodied aircraft maintenance.
There is a growing role for original equipment manufacturers (OEMs) in the performance of
afterservice maintenance. This is associated with newer generation aircraft ranging from the
B787 through to helicopters, increased reliance on software-actuated components, on
composite airframe repairs and parts, and on “big data” monitoring. The two major aircraft
manufacturers, several helicopter manufacturers and a range of component OEMs have a
significant presence as MRO providers in Australia.
A third significant development is the emergence of a new sector of businesses, distinct from
traditional MRO businesses but beginning to encroach in different ways on their role. In contrast
to the traditional high-end MRO industry, which has been in decline over recent years, this new
sector of high-end aviation technical support, built largely around the leading edge of advanced
manufacturing, has been on a gradual if seldom-remarked growth trend. Building initially on
defence contracting, it has gone on to form lasting partnerships with airframe and component
OEMs, mainly through the supply of components and large component assemblies, but
increasingly handling specialist types of work on aircraft in service. This new sector is described
in greater detail in Chapter 3.
Taken together, these developments point to a significant shift in the way MRO is being done,
and in the structure and boundaries of the industry. The shift from established practice is big
enough to count as a new model of MRO. Besides being marked by greater outsourcing of
maintenance work and greater specialisation, it involves a growing tendency to handle
component wear and faults by replacement and off-site remanufacturing rather than by onframe or on-wing repair. It also signals a change in the pattern of MRO work resulting from
technological advances in the generation of aircraft (including light as well as large passenger
aircraft) which is just beginning to come into service. These newer designs incorporate advanced
self-diagnosis and self-rectification capabilities, meaning that human intervention is more likely
to be needed when unanticipated faults arise in highly defended systems, as opposed to the
established pattern of periodic checks at specified intervals. Simultaneously with these
technological developments, a gradual shift is occurring towards all-composite airframes lacking
the panel and frame joints which have been a very important source of problems and risks in
heavy maintenance. 2
Together, these coinciding developments mean that aircraft maintenance in future is likely to
depend increasingly on high-level diagnostic skills, implying a continuation of the evolution from
trades to paraprofessional status which has been in progress since the turn of the century and is
reflected in the most recent reforms to maintenance licensing regulation. At the same time, the
scope of MRO will need to expand to include the areas of advanced manufacturing and
component supply (including component re-manufacturing) that will increasingly not only
support it but supplant many of its traditional functions. This convergence suggests that we may
see at least some merging of what are currently separate labour markets, with AMEs needing a
skill base and a system of qualifications which allows them to move back and forth between
traditional and advanced-manufacturing subsectors as the location of work moves.
2
See for example Holland and Davies, 2013.
3
1.2.1 First signs of a transition: the current Australian MRO environment
In the airline sector, between now and 2025, the growth in demand for MRO services is
projected to be distributed fairly evenly across aircraft built between 2000 and 2010, although
work on aircraft built in the 1990s will also continue to grow. The highest volume of MRO work is
projected to remain with A320 and B737 aircraft. At present, about half the Australian fleet of
these aircraft is maintained onshore, with scope for this proportion to increase. This work is
done in-house by air operators, or through tied contractors, or particularly in the case of offwing components, through independent MROs, including specialists. Contractual arrangements
are increasingly varied. Air operators may sign maintenance contracts with independent MROs
or with other air operators. Independent MROs may specialise, either in components such as
engines or avionics, or in repainting or refurbishment. Alternatively, they may specialise in an
aircraft type: A320 and B737 specialists are seen as having good prospects over the coming
decade. Increasingly also, MROs are working across the Defence/civilian aircraft divide.
Australia, like most developed nations, is heavily dependent on air transport for a number of
functions essential to life in a civilised society. Regional regular public transport (RPT) is
increasingly provided by subsidiaries of the major airlines; other regional and rural operators
and airports have been struggling for viability, and the peaking of the mining boom will put
pressure on fly-in-fly-out (FIFO) services. The aircraft which make up the irregular public
transport sector and those in Australia’s large general aviation (GA) sector, are maintained in a
domestic maintenance industry. This sector too has afterservice tie-ins with smaller aircraft and
component OEMs, linking it into global manufacturing and distribution networks. Yet particularly
for providers of MRO services to charter operators seeking to meet gaps in low-volume RPT
provision, support is needed in gaining accreditation as approved maintenance organisations.
The diverse GA sector, comprising domestic low-capacity regular and irregular public transport
at one end, and embracing a whole range of vital public service functions such as the Flying
Doctor Service, firefighting, aerial surveillance, search and rescue, aerial work and policing at the
other, makes an essential contribution to the economy. These functions could not easily be
substituted by any other means, and for just that reason the industry needs to be adequately
resourced and built up in pace with national economic growth. MROs servicing the sector need
support, particularly in securing local LAMEs and in maintaining currency of training.
One of the key challenges coming out of this project is the need to identify innovative measures
to manage the sector as a whole, to ensure its continuing growth and contribution to the
Australian economy, and to expand its innovative and technological capacity.
1.3 Key findings
For the purpose of introducing our findings, we summarise them below. Each of the statements
made below is backed by comprehensive and detailed evidence in Chapters 2 to 11.
1.3.1 Is there a future for aircraft maintenance in Australia?
A key research finding is that there can be a good future for an Australian MRO industry,
provided the right settings and incentives exist. In a very competitive global market, Australia
has many of the prerequisites to play a significant Asia-Pacific role, as well as to meet its own
domestic needs. Its advantages start with a stock of highly skilled maintenance engineers — a
major asset at a time when many nations – notably those whose domestic aviation markets are
growing fastest – are struggling to find the specialised labour supply they require. This
advantage is backed up by world-standard professional education in aerospace engineering, an
innovative if steadily declining research capacity, a small but impressively capable set of
advanced manufacturing firms and MRO businesses, and a production workforce with leading4
edge manufacturing experience, mainly in the automotive and component industries, which is or
soon will be in search of new employment opportunities.
The Australian aerospace industry, though small by international standards, is already well
regarded by the world’s largest aircraft and component manufacturers. The experience gained
through Defence contracts, and particularly through widespread participation in the supply and
production chains of major aerospace companies, as well as the F-35 Joint Strike Fighter (for
which Australia has been designated as the heavy maintenance hub for the South Pacific), has
left Australia with a nucleus of manufacturing suppliers who are well used to meeting the
demanding requirements of OEMs operating at the leading edge of aviation technology.
Australia accounts for a larger proportion of Boeing’s outsourced production than any other
country outside the United States (US). This advantage will become increasingly important in the
MRO field as OEMs become steadily more involved in maintenance, or integrated supplymaintenance arrangements.
For some time, it has been alleged that Australia has lost its competitiveness in MRO because of
its relatively high labour costs. In practice, this disadvantage has often been less pronounced
than it initially appeared, allowing for the trade-off between price and productivity and the
impact of reworking on the total maintenance budget. But in any case, it is a disadvantage which
is likely to diminish quickly over the next ten years as the world moves into a major shortage of
aircraft maintenance skills. In what will increasingly become a seller’s market, people with the
appropriate skill sets should be able to command wage rates which move steadily closer to those
in Australia, even in those countries which have previously relied on low labour costs for their
competitiveness in the global MRO market. Already a number of the better-known outsourced
providers in low-cost countries have needed to buy into established MROs in industrialised
countries in order to get the capability they need to meet their expansion plans. As fleets grow
and labour supply remains constrained, it is likely that nations in the region will start to find
Australia an unexpectedly attractive option to meet at least their more technically demanding
maintenance needs.
Australia, like any other nation entering a globalised market, needs to specialise in its areas of
strength. It will need to find and target niche activities which require advanced skills and
advanced technological solutions, and where the criticality and value of the work are such that
price is a secondary consideration. As noted in the last section, the most promising of these are
likely to involve a convergence between maintenance as typically understood, and the areas of
advanced manufacturing which offer the combination of a product and a service. This is not to
understate the ongoing importance of the everyday work of aircraft maintenance, in particular
in areas of work that enjoy a measure of natural protection from overseas competition – in that
their aircraft are both too small to fly overseas – and are crucial to civilised life in Australia.
But it should not be assumed that the transition to a new industry model will come about
automatically. Such radical transitions seldom occur, especially in mature industries, without
coordination and support from governments. The shift will require a significant restructuring of
the industry and the labour market, involving the emergence of new firms and occupational
groupings and the disappearance or significant resizing of others. But it is difficult for this to
happen purely through the operation of markets. European governments have a stake in a
number of the aerospace organisations currently establishing a regional footprint in Australia –
Airbus/EADS, Safran, Thales, Finnmecanica SpA and RUAG, to name but five. In the US, the State
of Georgia’s infrastructural and tax support for Gulfstream’s Savannah Airport manufacturing
and maintenance centre has continued to provide multiplier employment and revenue benefits.
A serious and pressing threat is that the key resource on which Australia relies for its
competitiveness could easily be dissipated over the next few years. Employment in MRO,
particularly at the most skilled end, has been in decline ever since the last Census, with some
5
annual estimates putting the rate of attrition at over 20%. Unless these retrenched employees
get the opportunity to continue exercising their skills, those skills will surely decay, and just as
importantly, will lose currency as new generations of aircraft come into use at the most
profitable end of the market. Meanwhile training of the next generation of AMEs remains at well
below replacement rate (particularly if Defence is excluded from the calculations). A number of
the Technical and Further Education (TAFE) institutes which had gained international reputations
for the quality of their aircraft maintenance training have either discontinued or seriously
curtailed their programs. Without a major effort to upgrade training, the supply of qualified
entrants to the workforce might well have dried up by the time when the world shortage is at its
most acute and demand recovers spontaneously.
1.3.2 Do safety problems still exist for Australian aviation?
Looking only at the accident statistics for main-route passenger fleet, it would be easy enough to
conclude that flying has ceased to be dangerous. Statistically, flying is by far the safest mode of
travel, and has been for a very long time. The world accident rate for this segment has fallen to
somewhere between three and two accidents per million departures over the last ten years,
with a slightly declining trend; in Australia, the level has been around the same, albeit with a
very slight rise. Generally speaking, though, the number of accidents recorded in each year is so
small that any remaining variation has to be treated as random in statistical terms, and this is
even truer for fatal accidents. Moreover, the accident rate has remained relatively stable since
the 1990s. A recent study by the United Kingdom (UK) Civil Aviation Authority (CAA) calculated
that the average passenger in a jet aircraft in our region would have to fly over 5 million times,
or once a day for almost 15,000 years, to reach statistical probability of being killed in a crash.
However, some worrying indications remain. The same study revealed that across the world, the
average fatal crash cost 70% of the lives on board, and the two highly publicised disasters in
2014 (neither of which appears to have been an accident in the strict sense) demonstrated how
easily hundreds of lives can be lost at a time. While it would be premature to read much into the
slight rise in the trend for accidents in Australia since 2002, there is some cause for concern in
the fact that reports of “incidents” to the safety authority in Australia over the last decade have
risen almost twice as fast as the number of kilometres flown. And since all experts agree that
new passenger planes have become significantly safer in the last two decades, it seems
somewhat puzzling that the fatal accident rate has not fallen more noticeably over that period.
Other evidence suggests that the sustained low rate of fatal accidents may have led to some
complacency, particularly among airline managements faced with a very difficult competitive
environment where there has been increasing pressure to trade off safety margins against
operating profit. Recent statements by airline representatives, following incidents that have
involved obvious and severe risk to the safety of passengers, even suggest a level of denial. More
generally, evidence across a range of activities (including manufacturing standards, aircrew
vigilance and separation management) suggests a gradual slackening of safety cultures in
aviation as a whole.
An important aspect of this declining safety culture, particularly relevant to maintenance, is a
reliance on technological redundancy as a risk management strategy. Modern aircraft are very
unlikely to crash, largely because in each area of risk, a number of redundant measures are in
place to contain the likelihood of a mistake developing into an accident. This multiple defence
against system failure does not mean that it is unimportant if an individual mistake occurs or an
individual step in the process is skipped. If such assumption spreads, it can only be a matter of
time before redundancy is fatally weakened in a situation where the threat of an accident is
imminent.
A gradual weakening of the safety net also appears to be emerging with a shift in regulatory
practices. Aviation operates internationally under a very detailed and ostensibly uniform system
6
of regulation coordinated by the International Civil Aviation Organisation (ICAO), drawing its
basis from the Chicago Convention, a treaty which has been in place since 1944. However, the
ICAO has virtually no coercive powers of its own and depends on its member nations to enforce
the provisions of its code. Its standards and regulations allow significant scope for individual
nations to reach their own interpretations of compliance, or even to depart from the standard
provisions of the code provided they notify the ICAO. On the other hand, the Convention
effectively obliges each member nation to grant licences and certificates issued by another
nation equal status to its own, unless it can be demonstrated that they fall clearly below the
minimum specifications. The result is that consistency may decay over time, with substandard
practices emerging in individual countries and “leaking” into the global system through the
channel of mutual recognition obligations.
Another aspect of the process which particularly affects regulation is a growing tendency to
issue approvals by inspecting and approving the documentation rather than verifying that the
processes actually applied in the cockpit or on the workshop floor meet the necessary standards.
This risk appears to be becoming especially prevalent in the accreditation of the safety
management systems (SMS) of individual carriers or MROs, which are rapidly becoming the
primary tool of quality assurance for safety regulators, replacing traditional processes such as
on-site inspections and surprise spot checks. While the system-based approach has many
theoretical advantages (primarily that of being effectively self-enforcing once it is in place), there
has been an apparent tendency to accredit on the basis of the system that exists on paper,
rather than the system actually in operation within the enterprise. Decades of research on
organisational culture have shown that the two often diverge markedly, and there is reason to
suspect that this will apply just as much in aviation, particularly where the system relies on the
commitment of senior managers who are under strong pressure to maintain profitability.
The above observations apply to main-route, high-capacity passenger and freight services, which
together account for only a tiny proportion of the world and Australian fleets. In charter
operations and other areas of GA, the accident rate is not only many times higher, but actually
rising. The higher incidence of accidents in GA is largely attributable to these planes flying more
often at altitudes where severe weather conditions can be expected, and operating over often
difficult terrain out of small airfields and strips which lack the sophisticated air traffic control
technology of larger airports. Smaller planes are generally if by no means always much older
than those used in mainstream passenger work, and lack many of the safety features that are
now built into passenger jets; the increasing average age of the GA fleet is one probable reason
for the rising accident rate, as these smaller planes, though robustly engineered and perfectly
capable of being flown safely for many decades, depend increasingly on good maintenance to
keep them safe as they age.
1.3.3 What are the safety concerns that affect maintenance?
Widely varying estimates exist of the contribution to accidents made by faulty or neglected
maintenance. The most reliable of those currently available suggest that it is a significant factor
in around 10% of accidents, though rather more important for certain categories like landing
gear failure and engine failure in flight. However, it is generally estimated that around 30% of
accidents involve some kind of failing in a mechanical or electronic system, which could
conceivably be maintenance-related. Because some kinds of faulty maintenance have
consequences which are hard to detect, it is likely that its contribution is somewhat
underestimated even in professional accident reports, particularly where there is an obvious
primary cause such as pilot error.
Precisely because maintenance is one of the least visible aspects of service quality to the
consumer, it is especially vulnerable to cost-cutting. The earliest entrants into the offshore
maintenance industry, serving the new US airlines that emerged after deregulation, competed
7
mainly on the basis of price, and subsequent reports found that malpractice and neglect in these
workshops (including the use of unsafe spare parts) had been the primary cause of several very
serious fatal accidents. While the industry has since diversified, with many of the newer firms
seeking to compete through specialisation, economies of scale or service quality, the general
quality of work and standard of care still appears to be highly uneven.
Since there are some potentially fatal consequences of poor maintenance which can remain
latent for as long as 20 years, it is likely that other Australian planes have remained in service
with such defects until they reached the end of their service life, or else were sold on to other
countries or prematurely retired for fuel economy reasons.
One difficulty which emerges when maintenance is split up between several contract providers
is a loss of the “whole-of-plane” approach to airworthiness. If each contractor is required to
work only on a particular component or a particular set of operations on the airframe or
electronics, there is a risk that the contractors will look only to the precise requirements of their
respective contracts.
The last line of defence in releasing aircraft to service after maintenance is the licensed aircraft
mechanical engineer (LAME), a special category of maintenance engineer requiring more posttraining experience and a demanding examination on the underlying theory.
The need for a licence issued by government regulator means that the LAME, though in most
respects an employee of the carrier or MRO in question, has a parallel role as a delegate of the
State required to make decisions independent of the management chain and based purely on
safety considerations. This means that the LAME should not be unduly deflected from this vital
responsibility by the tension between profitability and safety which can complicate and
compromise managerial decision-making.
There is thus a safety risk in any move towards a “company approval” model, which does not
involve personnel licensing but places with the operator the responsibility to “approve” the
“certifying employee”. Since such a company-based approach is entirely legitimate under the
Chicago Convention, it could in principle be adopted by an individual nation, in either pure or
hybrid form, without coming into conflict with international responsibilities – provided the latter
are correctly understood. Much of the controversy over the new licensing scheme introduced in
Australia from 2006 onwards has centred on concerns about whether the new regulatory
framework may facilitate such a shift of responsibility.
The most obvious problem with offshore maintenance is that it is very difficult to maintain the
level of supervision which Australia used to apply over all the available providers. This is an
international problem, which in principle would be addressed most cost-effectively by
multilateral action, but under its present constitution the ICAO has neither the powers nor the
resources to run such a scheme. While there are options for independent non-government
standards accreditation which are emerging, the only real safeguards today lie in the due
diligence carried out by individual airlines before putting work out to a contractor, which in
nearly all cases is treated as confidential commercial information.
However, each of these threats is overshadowed by the most important development since this
program began: the strengthening evidence that the world will shortly face a serious shortage of
skilled aircraft maintenance labour. This now appears to be of sufficient proportions to merit the
description of a crisis, and is starting to emerge already as a practical problem for MRO providers
in some parts of the world. Unless Australia takes proactive measures to build up its capacity to
service its own fleet, we believe that by next decade this skills crisis will represent the largest
single threat to the safety of Australian aircraft users since the jet era began.
8
1.3.4 Can Australia meet its future labour supply requirements?
Predicting future demand for skilled labour within Australia has become steadily more difficult
because of the uncertainty about the future structure of the Australian airline industry.
Questions remain as to whether any Australian airline will still be operating significant
international services in ten years’ time, how long the low-cost carrier (LCC) model represented
by Jetstar and TigerAir will remain viable within a horizontally integrated duopoly, and whether
increasing levels and/or different mixtures of foreign ownership will influence decisions on the
sourcing of maintenance. Of even greater impact will be the recent wide and unpredictable
fluctuations in the price of jet fuel. The spectacular price fall over the last year, unforeseen only
two years ago, is bound to have lasting but currently unpredictable consequences for decisions
on whether or when to introduce new-generation aircraft, and the timing of the introduction of
these low-maintenance models is likely to become an important determinant of how much
maintenance is needed across the world at any point in the future.
The same uncertainties are faced, in one form or another, by most other nations, but planning
for future training and labour supply requirements still needs to proceed on some kind of
defensible basis. International bodies like ICAO and the International Air Transport Association
(IATA) have tried to meet this need by developing indicative projections of demand over a 20year period which are acknowledged to be imprecise, but which are considered sufficiently
consensual to function as a scaffold for planning. Boeing has also produced its own projections,
updated every year, which can be assumed to incorporate a lot of corporate knowledge
unavailable to the broad policy and research community. According to these projections, the
world aviation industry will need somewhere around a million new qualified aircraft
maintenance technicians by the early 2030s (the Boeing figure is substantially lower, but applies
to a smaller segment of the world fleet). Based on 2010 figures, the capacity of the world
training system in each of the twenty out years was expected to fall at least 25% below the
annual growth in labour requirements, while in the Asia-Pacific region, achievable output was
running at only a third of that level. This implies an annual shortfall of over 18,000, 80% of it
concentrated in the Asia-Pacific region. According to estimates produced independently by IATA,
demand growth was most likely to peak somewhere towards the end of this decade and start
levelling off only in the mid-2020s.
The clear implication is that in the near future at least, there will be a very high world demand
for training capacity, especially from other countries in Australia’s region. This could well
represent a highly profitable business opportunity. Australia, with its excellent international
reputation as a provider of tertiary education and training to world markets, would appear in
principle to be very well placed to capture this new demand, except that the institutions which
might have supplied it have been run down in recent years and need swift action to assist a
recovery sufficient to meet even the likely Australian demand for skilled labour within the period
when the demand is most likely to peak.
Our own calculations, set out in more detail in Chapter 10, suggest that even with heroic
measures to restart training effort, there would be no realistic possibility of Australia increasing
its output sufficiently to meet the ICAO formula for the numbers required to handle all the
maintenance on its own fleet within the next twenty years. Taking a somewhat lower demand
estimate calculated from Boeing’s forecasts, we calculate that it would just be possible in
favourable circumstances to raise output sufficiently to meet the requirements by the early
2030s. This would mean starting with an intake equivalent to the largest number of annual
commencements recorded in the last decade (including defence establishments), increasing that
intake by an additional 5% in each year up to 2020, and taking a number of other measures to
increase retention in training and reduce attrition in the employed workforce. While definitely
challenging, such a strategy appears to us feasible in principle and within the current potential
capacity of the training system, assuming the will and resources were there to support it.
9
The present situation bears little resemblance to this vision. Training output is falling below
replacement level for the existing workforce and likely to fall further behind by around 17% over
the next decade. Unless the situation is remedied quickly, it seems inevitable that Australia must
become a net importer of either MRO services or MRO labour just at the time when the world
supply will be at its tightest.
The necessary adjustment will need to take account of the interaction between the new licence
system and training arrangements. Training under the now predominantly privatised system has
become expensive and increasingly hard to access as more of the established providers
withdraw their courses in the face of declining demand. While the newly introduced licensing
scheme requires a base qualification at the diploma level, very few States in Australia have
adjusted their student support policies to accommodate the additional training time this implies.
This means that experienced workers wishing to upgrade or update their qualifications, to
progress from a basic AME qualification to the licensing stage, or in some cases to restore
privileges which they lost in the transition to the new licensing system, increasingly find
themselves having to bear the full cost of the training and/or assessment since few employers
are willing to provide the necessary support.
There is a need to ensure that the new Australian qualifications are genuinely comparable with
those required by the European Aviation Safety Agency (EASA) scheme on which the new
Australian licence structure is based. It is important to ensure that training hours measure up to
those prescribed by EASA or the ICAO. This issue requires resolution as it will potentially place
further obstacles in the way of either new or experienced Australian LAMEs seeking employment
in Europe or in other countries whose licensing system follows the EASA model. Problems in the
quality and adaptability of graduates are also emerging, at one end of the scale because of a
declining investment in theoretical background training, at the other because there are
inadequate opportunities to develop manual skills.
Smaller planes make up well over 90% of the Australian fleet. Controversy continues over the
design of a small plane license which can articulate with the new licenses and qualifications built
around the EASA system. The separation between small and large planes, along with the
assumption that size equates with technical complexity (the basis of the licensing system), is
increasingly challenged by the increasing technical complexity of some small planes. Developing
a sophisticated license structure that can prevent the two (GA and RPT) developing into separate
labour markets remains a challenge.
The problems with skill development and retention stem from institutional arrangements which
are inappropriate to the challenges currently facing the industry. The highly reactive, marketlagging and individualised model which has shaped training arrangements in Australia over the
last two decades has proved inadequate to meet the needs of radical industry transformation,
because it has sacrificed forward planning, anticipatory adjustment, resilience and continuity to
an overwhelming imperative of short-term responsiveness to the immediate requirements of
existing employers. As a direct consequence, the decline in demand from the existing employers
threatens to result in a break in the continuity of skills supply from which it may prove very
difficult to recover.
1.4 Limitations of this study
So far as we are aware, this is the first detailed academic study on this broad topic to have been
carried out in Australia. Its methodological limitations are discussed in detail in Appendix 1. In
terms of content, we have said very little about helicopters, despite the fact that they face a risk
four or five times greater than fixed-wing aircraft, have specialised and in many respects
technically advanced requirements for maintenance skill, handle a high proportion of the public
service work, and are making up a growing proportion of the fleet, particularly at the smaller
10
end. We see the maintenance needs of rotorcraft as an important focus for future research in its
own right, and one that may offer better prospects of getting support and involvement from the
major employers and their customers. In the closing chapters, we in fact identify helicopter MRP
as a potential niche for Australia in the Pacific region.
A second content limitation is that we did not investigate in ant depth the organisation of
maintenance and maintenance training within Defence. At most we looked at some civilian
MROs doing maintenance and training work for the Australian Defence Forces under contract,
and made some reference to the role of Defence as a client of OEMs. Our survey data provided
tangential evidence on career mobility between the sectors. A follow-up project would examine
these issues thoroughly as significant ones for national aviation and aerospace industry selfsufficiency and sovereignty. We believe an important issue for consideration is a closer
alignment between civilian and Defence maintenance training and qualifications.
Wherever possible we have provided quantitative analysis drawing on reputable resources.
Unfortunately this kind of information proved much less available than expected, partly because
the occupation is spread across two small industries (4-digit in the Australian and New Zealand
Standard Classification of Occupations (ANZSCO) classification), Aircraft Maintenance and Repair
and Air and Space Transport, and many of the important official sources like the National
Accounts and some of the major series on vocational training are not disaggregated sufficiently
to separate it out. Other information is simply not available in the public domain – notably
statistics on the amount of work outsourced and where it goes. This kind of information does
not need to be disclosed to either the regulatory authority or government research
organisations in Australia, though in the US reporting of these matters is now mandatory.
1.5 Structure of the report
Chapter 2 begins by providing an overview of the world MRO industry and goes on to outline the
historical background to the current state of play with civilian aircraft in Australia, focused
primarily on the airline sector.
Chapter 3 provides a detailed profile of the Australian civil MRO industry, and its relationship to
domestic aerospace manufacturing. It begins with a breakdown of the CASA-registered fleet by
aircraft age, category and application, followed by a summary of where these aircraft are
maintained and the volumes of maintenance work generated. It then provides a mapping of
Australian MROs, a summary of their civilian and Defence activities, and a mapping of training
providers, OEMs and manufacturing suppliers, and aviation and business services. It also
summarises key survey-based findings about the MRO workforce and their career trajectories,
and about the business strategies and outlook of small, mainly GA-sector MROs.
Chapter 4 examines the statistical evidence on aviation safety and the role of aircraft
maintenance in guaranteeing it, identifying some trends which suggest that the long-running
decline in accident rates could be less permanent than it appears.
Chapter 5 examines qualitative aspects of safety, looking at the factors behind the excellent
safety record of high-capacity RPT and identifying threats which are emerging to the multiple
systems that protect aircrew and passenger safety.
Chapter 6 examines the evidence on the safety of offshored maintenance arrangements and
concludes that the emerging shortage of qualified engineers is likely to put growing pressure on
safety management systems.
Chapter 7 provides a detailed analysis of the regulatory mechanisms governing offshore
maintenance safety, identifying tensions in ICAO regulation which can obscure key
responsibilities. In the light of the US experience of offshore safety regulation, it concludes that
11
returning maintenance onshore is the only really satisfactory means by which Australia can
enforce adequate quality assurance.
Chapter 8 focuses on the role of licensing in aircraft safety oversight in Australia. Whilst
endorsing the case for EASA alignment, it argues that the processes of transition from the old
civil aviation regulation (CAR) 31 licence categories to the different structure of the EASA B
licence could have been handled with greater clarity. It examines the obstacles which remain to
the transferability of Australian licenses and qualifications to other jurisdictions, and the still
unresolved problem of small aircraft maintenance licensing.
Chapter 9 documents a sharp recent decline in AME apprenticeship training. It goes on to
discuss the problems created for aircraft maintenance skill training by inappropriate
requirements in the current legislative framework governing Vocational Education and Training
(VET) in Australia, notably how the law bans training packages from covering curriculum, and
how training not accredited by the Civil Aviation Safety Authority (CASA) can count towards a
CASA-approved qualification for licensing purposes. It raises questions over whether Australian
qualifications meet EASA and ICAO standards, and sets out reform proposals.
Chapter 10 provides detailed scenario-based projections of Australian and global maintenance
workforce supply and demand. It concludes that Australia is plunging unprepared into a global
crisis of undersupply in MRO skills. It will be increasingly difficult to rely on offshoring, but the
national training capacity has been run down to the point where urgent steps need to be taken
to restore capability to perform our own maintenance, let alone become an Asia-Pacific
maintenance training exporter. The first step must be an immediate moratorium on further
headcount reductions, backed up by incentives to retain existing workers in the industry. To
rebuild, it will be necessary to combine the capabilities of civilian and defence training facilities
and invest seriously in new training and retraining. However, if the rebuilding starts now,
Australia could by the early 2020s be a net exporter, of MRO services and MRO training.
Chapter 11 contains an overview of the benefits which Australia could derive from a rebuilt
national MRO industry and the factors which make it possible. It summarises evidence of the
flow-on effects of aviation/aerospace business activity, identifies the nuclei of future
aerospace/aviation clusters and networks, and argues their potential benefits to regional
development, trade balances, national security and innovation. It concludes that Australia has
the potential capacity to bring most if not all of its currently offshored maintenance back on to
home soil, and that the emerging high-end aviation technology support sector provides the basis
for an industry capable of targeting high-value niches in regional and global MRO markets,
provided it can satisfactorily combine forces with the existing traditional MRO sector, including
the large number of firms servicing regional and GA operators. Some government support may
be required to bring about the necessary degree of coordination, though this depends equally
on the industry developing its own co-operative institutions. It suggests the establishment of a
national aviation/aerospace industry Manufacturing/Maintenance Forum in order to develop
options for the future of the industry.
Chapter 12 draws together the different threads in the report within a common strategic
framework, reiterates the key findings and recommendations, and reinforces the
recommendation for a National Manufacturing/Maintenance Forum, as an ongoing source of
advice on industry development, and related skills development needs, to a newly formed
aviation Industry Reference Committee.
12
Chapter 2 Background and Historical Survey
2.1 Introduction
This chapter provides definitions classifying maintenance activities, and reviews broad trends in
the global maintenance industry, including future growth predictions. The next chapter provides
an overview and detailed breakdown of way the Australian aircraft maintenance industry is
structured, its changing place within aviation and its links to the wider aerospace industry. This
chapter focuses on the global picture and the role of the major airlines, the following one
presents a more nuanced view of the Australian aircraft maintenance industry.
2.2 Definitions
Aircraft maintenance falls into four broad categories:1
Line maintenance – checks, fault diagnoses, adjustments and running repairs which are
carried out without taking the aircraft out of service. These include scheduled checks
carried out between legs or flights, or at regular (weekly, monthly, etc.) intervals as
required by the manufacturer’s specifications, the latter elements being generally
classified as A or B checks ;
Heavy airframe (base) maintenance – involves more extensive work carried out on the
fabric and primary mechanical components of the aircraft, culminating in the very
extensive D checks which involve removing the interior fitout and external paint to
examine the fuselage and wing structures, leaving the plane out of service for a month
or two, and which generally fall due every 5–7 years depending on the types currently in
passenger service (for newer aircraft the time could expand out to 12 or even 15 years);
Engine overhaul – major checks, maintenance and replacement which require the
engine to be taken off the wing and disassembled;
Component maintenance – including work on wheels and tyres (the largest segment, at
25% of global value added), followed by flight deck avionics (14%), fuel systems, various
hydraulic systems, interiors and electrical systems.
Worldwide, it has been estimated that labour makes up an average 70% of the costs of
maintenance.2 Its contribution is highest in line maintenance, where it represents just over 75%
of the cost, followed by heavy maintenance at 55%, and lowest in engine overhaul at only 9%.3
Viewed in terms of total world labour costs, heavy and line maintenance account for around
30% each, and each of the other two categories for 20%.4 This breakdown explains why heavy
maintenance is the most attractive component for operators seeking to cut costs by offshoring
1
This classification is the one used by in the United States, which provides the most detailed global figures
on the world aircraft maintenance market. Terminology may vary from country to country.
2
Aeronautical Repair Stations Association (ARSA), 2013.
3
CAVOK, 2015. Note that these estimates are considerably lower than those given by ARSA two years
earlier. In particular, labour as an element of engine overhaul costs has fallen from 22%. This may be
partly to do with different methods of estimation, but does suggest that strenuous efforts have been
made across the entire global industry to curtail labour costs over this period.
4
Aeronautical Repair Stations Association (ARSA), 2013).
13
work, especially as the labour required for some parts of the work (e.g. stripping out seats and
cabin fittings) does not need to be especially skilled provided it is adequately supervised.
2.3 Background
2.3.1 The global MRO industry
Publicly available estimates prepared jointly by the CAVOK consultancy (formerly Oliver Wyman)
and the US Aeronautical Repair Stations Association (ARSA) 5 indicate that the world civil nongeneral aviation (GA) maintenance repair and overhaul (MRO) industry at the beginning of 2015
consisted of some 4,743 businesses, almost 80% of them SMEs. It employs a total of 378,762
persons, 73% of them classified as “technicians”, presumably meaning highly skilled workers
with similar qualifications to an Australian aircraft maintenance engineer (AME). In turn, roughly
one in five of the technicians is “certificated”, i.e. licensed in Australian terminology.
The global value of the industry was estimated in early 2015 at $US 67.1 billion (AUD 84.4
billion),6 of which the largest contribution came from engine maintenance, representing 41.6%.
This was followed by heavy maintenance at 21.6%, with component and line maintenance at
18.5% and 18.3% respectively. In terms of employment, component maintenance accounted for
325,408 workers across the supply chain, of whom 238,760 were technicians. Heavy
maintenance employed 300,489 (220,282 technicians), engine maintenance 282,648 (206,901)
and line maintenance 94,690 on-site and 10,415 in the supply chain. From these disaggregated
figures (which add up to just over a million, around two thirds of them technicians) it is clear
that most workers in the industry worked either across two or more specialisations, especially in
the case of the technicians, or else in parts of the supply chain rather than in an actual
maintenance facility.
Three International Civil Aviation Organisation (ICAO) regions, North America, Western Europe
and Asia-Pacific, dominated the world market in 2015 with just over 70% of the demand. On the
supply side, the United States (US) alone accounted for an estimated 85% of the world’s MRO
businesses, 57.6% of direct employment in MRO, and 51% of the world’s technicians, though
North America as a whole represented only 25% of world demand. However, while MRO services
accounted for 75% of domestic employment in the sector, they contributed only 43% of the total
value added (estimated at $AU 54.3 billion), the balance being made up by parts manufacturing
and distribution with only a third the number of employees.7
Despite the apparent domination of world supply by the US, North America as a whole remains a
net importer of MRO services, probably a reflection of its enthusiastic adoption of offshoring
since the 1990s, as described later in this chapter. In fact, if we exclude line maintenance which
is mostly non-tradeable (at least where domestic routes are concerned), all the ICAO regions are
net importers except Western Europe, which earns almost $10 from exports for every dollar it
5
CAVOK, 2015. These estimates, along with others from the same publication which are quoted
throughout this report, refer only to the maintenance of commercial jet and turboprop aircraft. GA
aircraft up to 5,700 kg maximum take-off weight (MTOW) (which include what would be classified in
Australia as low-capacity regular public transport (RPT)) are explicitly excluded. The consultants draw their
estimates of aggregate value and employment on figures from a number of sources of which the most
important are the Federal Aviation Administration (FAA, 2015a), and Oliver Wyman’s PlaneStats , while
their market share estimates are based on “known MRO contracts” and hence may be less reliable.
6
Based on the exchange rate as at 30 April 2015. Note that from this point on, all estimates are quoted in
Australian dollar values.
7
CAVOK, 2015, p.78, Exhibit 64.
14
Chapter 2 - Background and Historical Survey
spends on imported services or products.8 However, the situation is more complex when
disaggregated by maintenance segment, with both China and Asia-Pacific as a whole being net
exporters of heavy maintenance, as is Latin America, while North America is a net exporter of
component maintenance. Western Europe’s positive trade balance applies across all three
segments.9
This breakdown explains why specialisation has become characteristic of world trade in MRO
ever since such services have become easily tradeable. Heavy maintenance is the most attractive
component for operators seeking to cut costs by offshoring work, especially as the labour
required for some parts of the work (e.g. stripping out seats and cabin fittings) does not need to
be especially skilled – although it does need to be adequately supervised. Conversely, the most
advanced industrialised nations continue to control the most profitable and least labourintensive parts of the business.
Perhaps the single most significant change to the structure of world MRO this century has been
the growing diversity of providers. In the 1980s, the vast majority of maintenance was done by
airlines on their own fleets. Since the 1990s there has been a major rise in the number of
businesses, independent of the operators, which exist solely to provide contract MRO.10 Several
airlines, notably the Lufthansa Group, have also found it profitable to develop large third-party
MRO divisions, providing services to other operators, including major airlines.11 In addition, the
manufacturers of airframes, engines and components (original equipment manufacturers OEMs) are rapidly increasing their direct involvement in maintaining their products, especially as
new generations of aircraft with more sophisticated technology come into service.
Today the only category which is still dominated by the airlines is line maintenance, where the
more regular checks do not lend themselves to systematic offshoring (as opposed to on-the-spot
work at some stopping point along an international route). Consequently some 80% still takes
place on the airline’s own premises, but even there, the great majority of the work is now done
under contract, either by subcontractors working directly to the airline, or by independent MRO
businesses.
Despite the well-publicised outsourcing of heavy maintenance over several decades, on average
around half of this category is still carried out in house, though airlines working solely on their
own fleet account for only 28% of all work. Those airlines which have broadened their capability
sufficiently to offer their services to other carriers are generally better placed to handle their
own in-house maintenance because of the economies of scale they can achieve, and have
managed to hold or capture another 22% of the market. Independent MROs and third-party
services provided by other airlines or their specialised maintenance subsidiaries together
account for just over 40%.
8
CAVOK, 2015, p.63, Exhibit 51.
9
Ibid., pp. 68-69.
10
The trend to using third party MROs is stronger in low cost carriers than in legacy airlines. Mulcair, 2012;
BoeingEdge Flight Services, 2014. Outsourcing is more common in the case of large wide-bodied aircraft,
where labour intensity is an issue, and in the GA sector, where operational scale may preclude the
ongoing employment of qualified maintenance staff, unless the operator also offers third-party
maintenance services to other operators.
11
Lufthansa Group have found that the rate (though not the volume) of return on their third party MRO
services to 800 other airlines and aircraft leasing companies has outstripped the rate (but not the volume)
of return on carrying passengers. Lufthansa Group, 2014a, 2014b.
15
By contrast, OEMs dominate the world market for engine maintenance, holding almost 65% of
the market if their partner businesses are included, and expect to increase their involvement as
new generations of engine come into service.12 They and their joint-venture partners together
control around a quarter of the world market for component maintenance, with airlines now
reduced to only 8%, and the remaining 60% shared mainly between Independent MROs and
maintenance offshoots of other airlines. However, the consultants report that OEMs take most
of the more complex component work, and hold a 78% share of the supply chain. At the
moment their presence in heavy maintenance is negligible, but they are making strenuous
efforts to take on a greater share of the work as more operators introduce aircraft with
composite airframes, on which there appears to be very little expertise in the contract MRO
industry so far, especially in the low-wage countries which have benefited most from the
outsourcing trend.
Line maintenance may well become more complex. As aircraft and components become more
reliable, airlines are thought to be finding the intervals between base maintenance airframe
checks and component overhaul are lengthening, making it less economic to retain in-house
base maintenance facilities and staff for newer aircraft. The development of in-flight diagnostic
technologies (AHMS or aircraft health monitoring systems) may be coupled with the despatch of
specialist technicians from airline or independent MRO centres, or, increasingly, by aircraft and
component manufacturers as part of afterservice contracts.
The greater reliability of new aircraft is reportedly pushing OEMs to greater reliance on
afterservice contracts, whether for routine maintenance or ongoing small modifications. Several
OEMs offer, as part of their sales package, just-in-time maintenance, delivered through a global
MRO network, based on diagnosis of individual aircraft defects and maintenance requirements,
fed back to the OEM through a continuous flow of big data collection and analysis.13 The use of
“big data”, continually fed back from flight systems, is potentially allowing collaboration
between OEMs and those airlines that have in-house maintenance capability, to achieve
incremental improvements for example in fuel economy.14
2.3.2 Future growth predictions
The CAVOK report predicts that world MRO activity will grow at an average compound annual
growth rate (CAGR) of 4.1% over the next ten years, passing the $100 billion mark in Australian
dollar values in or around 2024. However, the growth pattern will be uneven across the
segments, with engine maintenance leading at 5.1% CAGR and heavy maintenance growing at
only 1.4% annually. By 2025 engine maintenance will make up 56% of the industry by value,
with heavy maintenance losing around 1.5 percentage points of share.
Among the major regions, Asia-Pacific is predicted to show the highest growth rate at 5.6%
annually. By 2025 it will have just passed Western Europe, where annual growth is expected to
be around 3%. However, the highest growth rates are likely to be found in individual countries –
within the broader Asia-Pacific region, India should grow at over 12% a year, and China at 8.6%,
12
The trend started in the 1980s based on power-by-the-hour afterservice contracts offered by the major
engine manufacturers. Knowledge@Wharton, 2007.
13
An example is Boeing’s B787 “Goldcare contract”. Maloney, 2011; Mulcair, 2012. In the regional jet and
business jet space, Gulfstream offer similar through-life service. In the first six months of 2015, while
Bombardier’s pre-tax earnings from aircraft sales increased, relative to the same period in 2014, from
$212m to $215m, their earnings from design, manufacturing and afterservice component and repair
increased from $38m to $84m. Stockwatch, 2015.
14
Cox, 2015; Siedenman and Spanovich, 2015.
16
doubling its market size over the ten years, as will Latin America and the Middle East. The
CAVOK consultants do not provide forward projections for shares of the supply side, but it seems
reasonable to expect that the balance will shift gradually in favour of the regions and countries
showing strongest growth in demand, as the OEMs establish offshoots and partnerships to give
themselves an on-ground presence in the most important markets. However, the US is likely to
take back a higher proportion of its own heavy maintenance (possibly as much as 30% of the
work currently done offshore)15 as a continuing compression of wage rates between the US and
traditionally low-wage countries reduces or even eliminates the savings which American carriers
currently achieve by offshoring their maintenance.
70
60
50
40
30
20
10
0
Heavy
Component
Engine
2015
Line
2025
Source: CAVOK (2015)
Figure 2.1 Total world value of MRO by segment, 2015–2025 (Billions of Australian dollars,
constant 2015 values)
Hence, while the big story of the last decade has been the growth of a global third-party
maintenance sector made up of independent businesses which concentrate on heavy
maintenance, the signs now are that the expansion of this sector may have hit a limit.16 Airlines
in the US today, and potentially in other countries that have actively sent their maintenance
offshore, seem bent on taking a share of it back, while it now looks increasingly probable that
some of their present business may be taken over by OEMs. This can be expected to happen
particularly in engine and component maintenance, but will probably also extend into heavy
maintenance as more of the new-generation planes come into service with composite hulls and
other advanced technology requiring new kinds of expertise which the manufacturers may not
trust the third-party industry to develop adequately. Certainly in the case of engine
maintenance, the role for independents is rapidly shrinking unless they can enter into some kind
of partnership arrangement to handle OEM maintenance.
This is probably a trend which lies some way in the future, because the introduction of newer
types like the 787 and A350 has been slower than anticipated, owing in the first case largely to
unexpected design bugs, but also because the falling fuel price over the last two years has
removed some of the urgency for their introduction. The incentive is likely to return, partly with
15
Spafford and Rose, 2014.
16
Spafford and Rose, 2013, pp. 1, 6.
17
an expected resurgence in fuel prices towards the end of this decade,17 but also because of the
planned introduction of an emissions trading scheme (ETS) in Europe next year.18 Consequently
CAVOK expect it to start influencing the size and shape of the demand from maintenance from
about 2020 onwards. Once this point has been passed, it seems likely that the heavy
maintenance market in particular will bifurcate, one sub-segment dealing with the new airframe
technologies and entailing relatively low volume but high value-added, while the other
concentrates on end-of-life maintenance for the generation which is currently in service, and
which will have passed out of its low-maintenance “honeymoon period” by early next decade.19
2.4 Retrospect and prospects
2.4.1 Three decades of change in the global industry
Up to the 1990s, fleet maintenance was seen in most countries as part of the service package
that made up a “full-service” airline. Operators ran their own in-house facilities to do most or all
of the routine maintenance on the aircraft they flew. In fact, in the early postwar years there
was little alternative but to treat it as such, since there were few or no dependable outside
sources for most types of MRO. In a time when passenger planes still crashed frequently, it was
an obvious source of competitive advantage for an airline to have reliable aircraft and a
competent workforce to keep them so. Developing this workforce was recognised as the
responsibility of the airline, which invested heavily in developing a specialised workforce for the
purpose, while engineers generally remained for much or all of their working life with the airline
that had initially trained them.
The first major disruption to that pattern occurred in the US with the deregulation of passenger
air services under the Carter administration. These changes saw an immediate injection of new
players into the industry, many of them poorly capitalised, which were able to offer fares well
below those of the established airlines. The domestic industry became price-driven, with flow-on
effects that accelerated as competitive pressures intensified. Cost cutting led to the emergence
of a new segment of independent MROs, many of them located in Central America, which took
advantage of low wages to undercut US providers.
In one sense the crisis self-corrected, since a steep rise in fuel costs, which began in the 1990s
and continued up to 2013, largely destroyed the savings that airlines once garnered from
continuing to fly older, less fuel-efficient designs. Between 2007 and 2011, the proportion of the
global fleet which was retired at the age of 25 or less grew from 21% to 43%.20 This wave of new
aircraft entering the US fleet has provided some relief, at any rate in the short term, from the
lethal combination of shoddy maintenance with ageing airframes and engines. But at the same
time there appears to have been a cleanout of some of the least satisfactory MRO providers,
with more reputable businesses coming into the industry and a growing willingness on the part
of the Federal Aviation Administration (FAA) to impose more demanding regulation on the
offshore industry. This reaction is discussed in Chapter 6.
Despite the public unease, the US industry continued to rely heavily on outsourcing its
maintenance to foreign countries; by 2008 some 70% of heavy maintenance was outsourced,
and 35% of D checks were offshored.21 In more recent years, however, there appears to have
17
World Bank forecast, cited in CAVOK, (2015).
18
CAVOK, p.46.
19
ibid, p.35.
20
Spafford and Rose, 2013, p. 6.
21
Office of the Inspector General - United States (OIG), 2008; Tang, R. and B. Elias, (2012), ch 2.
18
been a shift of opinion among airline operators towards bringing more of the maintenance back
on shore. A report published at the beginning of 2013 by the US consultancy Oliver Wyman
estimated that US had the capacity to repatriate 30% of base maintenance currently done
offshore more or less immediately, with a potential gain of some 5000 jobs.22 Since then, falling
wages in the US have worked in concert with a growing inadequacy in worldwide maintenance
capacity to increase the competitiveness of American-based MROs.
Meanwhile, outside the US and building on its example, a new sector of budget airlines or lowcost carriers (LCCs) emerged from the 90s onwards, initially differentiated from traditional
(legacy) airlines by targeting a market segment which was much more price-driven than the
traditional consumer of air travel. Like the new competitors in the US market, most of the
original LCCs in other markets were set up on a very limited capital base. For most of them,
however, the option of husbanding their capital by using obsolescent aircraft had ceased to be
viable by the time they came into existence. Their available resources were stretched to the limit
buying or leasing aircraft and covering their basic operating costs. Most lacked the means to
build or staff their own maintenance shops. To cater to this demand, a new international
industry of independent MROs arose alongside those which had serviced the expansion of the
airline industry in the US. Some of these were offshoots of established airlines which had surplus
capacity in their shops or chose to expand them to cater for the new demand, while others were
set up by the manufacturers of aircraft or engines who saw an advantage in retaining control
over the maintenance of new generations of product which employed unfamiliar technologies.
Several of these new MROs either were based or set up as subsidiaries in developing or
emerging nations where they were able to achieve operating costs – principally, of course,
wages – well below what they could achieve in their home bases. As a combined result of these
input cost advantages and the economies of scale they were able to achieve, the independent
operators have been able gradually to pull in more and more of the business which established
airlines traditionally handled in their own shops, and in the process have tended to push up the
marginal cost for those airlines which still choose to keep their maintenance in house. As a
result there has been a major shift in the balance of maintenance activity from carriers to
independents of one kind or another, and increasingly over recent times to OEMs.
While the line of demarcation between low-cost and full-service airlines was initially clear, cost
pressures on all airlines – specifically, what seemed until recently to be an the inexorable rise in
the price of fuel23 — have since led many of the established carriers to copy their marketing and
cost-reduction tactics. Even in the face of a stronger imperative for strategic and marketing
differentiation, legacy carriers have been forced into cost-cutting, if only as a holding
operation.24 In the process, as happened earlier in the US, aspects of the service package which
22
Spafford and Rose, 2013.
23
The International Air Transport Association (IATA, 2015a) estimates, based on data from the Platts
consultancy, show that the price of jet fuel peaked sharply in mid-2008, fell just as sharply in the following
six months, peaked again at a lower level between 2011 and 2013, fell steadily over most of 2014 and
spiked again in early 2015, to end the March quarter at around 60% of its level a year earlier. This is
expected to result in a saving for the global airline industry of $US83 billion over 2015.
24
As an indication of the kind of cost squeeze the world industry faced in this period, the president of the
International Air Traffic Association estimated at the start of 2013 that averaged out across all his
members, airlines had made net earnings of only $US2.50 for each passenger they carried in 2011/12, a
figure which he expected to rise to a heady $4 in 2012/13. By the end of 2014, this had risen to just over
$6, and was expected to rise by another dollar in 2015, chiefly because of further savings from lower fuel
prices beginning to flow through to most airlines as their hedging contracts expire.
19
had once been seen as competitive strengths came to be viewed as costs to be minimised. As
one of the more invisible components of service, maintenance fell under such a redefinition.
An important consequence of these changing incentives was a shift in the way airlines regarded
their maintenance workforces. In the beginnings of commercial aviation, the relationship
between aircraft operators and maintainers tended to be a close and trusting one. The
emergence of a strongly price-driven consumer market, putting pressure on established carriers
to lower their cost base and reduce headcount, coincided with the rise to popularity of an
“insourcing” model derived ultimately from the one promoted by McKinsey Consultants. 25This
model no longer saw the different functional areas in a corporation as interdependent parts of
the one system, but rather conceptualised them as “enterprises” within the firm known as profit
or cost centres, which needed to prove themselves cost-competitive with external providers if
they were to remain in existence. Maintenance was one such internal enterprise, and airlines
increasingly saw it as someone else’s responsibility to develop the future maintenance
workforce, and nobody else came forward to fill the resulting training gap.
The type training provided by OEMs can be built only on the basis of the broad conceptual
understanding developed through category training, complemented by the extensive handskills
and other practical experience historically developed through the apprenticeship model. It is not
at this point clear how the necessary training will be organised to meet the very significant
global shortfall in labour supply. Australia is strategically placed to help meet part of the AsiaPacific MRO skills shortfall. MRO training is potentially a significant export earner for Australia. In
Chapter 10 we explore this option.
2.4.2 Stocktake: Offshoring, onshoring and new relationships: The Australian
experience
It is difficult to be precise about the extent of offshoring that has happened in Australia because
no hard data are kept in publicly accessible form. This contrasts with the situation in other
countries, notably the US, which gathers and keeps extensive detailed data. In building our
knowledge, we have thus used anecdotal reports (many of them unattributable) and occasional
hints dropped by management in media releases or interviews. In addition, as part of this
project, a detailed industry mapping was undertaken, using a range of information sources. This
is described in the next chapter.
Despite the number and diversity of businesses undertaking MRO in Australia, maintenance on
larger civilian aircraft continues to be dominated by Qantas and Virgin Australia. Over the course
of 2014, the industry became a horizontally integrated duopoly, with each major airline owning
a full-service, a budget and a regional brand. A small competitive fringe of regional airlines
remains, of which the most important, Regional Express (Rex), is wholly Singapore-owned and
operates a fleet of SAAB turboprops considerably older than anything flown by the two majors.
As well, the large GA sector is served by several hundreds of MROs, some networked to
suppliers, who are still waiting for clarification of the application of regulatory change.
Qantas, now the world’s longest continually operating airline and one of the few still to be flying
under its original brand name, is the last survivor of the three airlines which effectively
monopolised Australian aviation from the immediate post-World War 2 period through to the
1990s. It started out in private ownership as a regional carrier in the 1920s, passed into
government ownership in the Postwar Reconstruction period, and for some years held a
monopoly of flights in and out of Australia, initially in close cooperation with Imperial Airways
(later to become BOAC and subsequently British Airways). A second government airline, Trans-
25
McKinsey and Co, 2009.
20
Australia Airlines (TAA) was set up in the postwar period, initially with the intent that it should
exercise a monopoly of domestic main-route carriage. However, the High Court ruled against
this, allowing the continued operation of two and subsequently one competing private airline,
eventually to become Ansett Australia. The two continued to have sole access to this market
until the 1990s under a tightly regulated two-airline policy, and even after this was lifted, the
market power of the duopolists made it impossible for any new competitors to survive long. In
1994, Qantas absorbed Trans Australia Airlines (TAA), and after that point both majors ran
international as well as domestic services. Over this same period, Qantas was privatised in
stages, becoming fully listed in 1995.
The security offered by the two-airline policy made it possible for the major airlines to build up
state-of-the-art fleets and a structure of maintenance shops at or close to the best world
standards. Being at the end of the line geographically, Qantas engineering often had no choice
but to fix things itself, and developed a very high level of technical excellence, evident for
example when industry leaders like Rolls-Royce drew on innovations generated on the engine
repair line in Sydney. In the process they became major contributors to the development of
apprenticeship in aircraft engineering. Increasingly as time went on, this meant that most people
who worked as maintenance engineers in Australia had done their training either in the defence
services or in the shops of one of the three major airlines.
This gave way from the 1990s to a period of partial deregulation and increasing competitive
pressure, especially in the international segment. The first casualty was Ansett, which went out
of business at the end of 2001. This development was unexpected and came at the end of a
succession of unwise commercial decisions coinciding with the collapse in demand for air travel
that followed the 9/11 disaster. One of the immediate casualties was its apprentice program,
leaving Qantas as virtually the only large civilian training provider. The other was Ansett’s
maintenance workshops. Some of these facilities were taken up by Qantas, but the demand was
never fully restored, since the new main-route carriers who came into the market over the next
few years to fill the gap (including one created by Qantas outside its articles of association) were
built on the LCC model which, as mentioned earlier, normally does not involve the carrier
owning its own workshops. A local MRO, John Holland Aviation Services (JHAS), took over part of
the Ansett workshops to handle business from a variety of airlines in Australia and the Pacific
(including work for LCCs), but failed to survive, leaving Australian airlines with no alternative
domestic independent provider on the scale they required.
The outcome was that Qantas, or at least that part of it which continued to trade under its
original business identity, became for some years both the only customer and the only provider
in key areas of Australian MRO. Australia is still highly dependent on Qantas both for its high-end
civilian MRO infrastructure, and for its supply of AMEs with the skills required to service currentgeneration large passenger aircraft. This largely explains why its activities in this field are
considered a matter of public concern rather than a purely internal affair of the company.
Qantas’s commercial performance deteriorated over the first half of the current decade. In the
space of a couple of years it went from reporting strong growth in the domestic markets, to a
pre-tax loss of over $300 million for the first half of 2013–14, accompanied by the loss of its
investment-grade credit rating at the start of 2014. It responded with an immediate plan for $2
billion worth of cost reductions, including a reduction in employment of 5000 jobs, equivalent to
about 15% of its workforce. While it announced an almost equally spectacular return to
21
profitability in 2014–15,26 it remains to be seen how the company will juggle the constraints
faced by legacy airlines against the need to manage reputational issues.27
Qantas was actually a late starter in the outsourcing process, at least so far as its core brand was
concerned. While it had always offshored a certain amount of overflow maintenance, which by
definition could not be performed within existing production capacity, its strategy of offshoring
work previously undertaken in its own workshops began in earnest in 2006/07 with the closure
of the Sydney Heavy Maintenance facility. Some of its work was shifted to facilities in Melbourne
and Brisbane, but an undisclosed proportion moved overseas. Before its profitability collapse, it
claimed that 90% of its heavy maintenance was still being done in Australia. Although this figure
cannot be confirmed, it is clear that considerable scope remains for further offshoring, especially
if the viability problems recur.
The most noticeable thing about Qantas offshoring is that the transfer of work overseas has
happened more or less in phase with the introduction of new-generation designs. While it
initially conducted some changeover training on the A380, it has announced a ten-year contract
with Lufthansa Technik Philippines for heavy maintenance of this aircraft.28 Plans so far
announced for a B787 maintenance and training base in Melbourne are believed to relate only
to line maintenance, although, as argued earlier in this chapter, Australia is very well placed to
provide a range of airframe and structural maintenance capabilities for this aircraft. The
winding-down of the Avalon facility was linked in repeated media releases to the impending
retirement of the last 747s in the passenger fleet, (though the closure actually occurred some
years in advance of their retirement, with the remaining 747 maintenance sent to Hong Kong).29
So far Qantas has maintained a welcome public commitment to building up a world-class A330
maintenance facility in Brisbane, where its current apprentice program is concentrated. Qantas,
its subsidiary Jetstar and its contractor Cobham who manages the QantasLink fleet, are carrying
out line and heavy maintenance on narrow-bodied jets and turbo-props in-house and on-shore.
Nevertheless, this activity is not on its own sufficient to sustain an Asia-Pacific regional
maintenance and maintenance training presence, and to effectively address the forthcoming
skill shortage.
In contrast to Qantas, Virgin has made a virtue of conducting its maintenance in Australia, much
of it in JHAS – albeit whipsawed against competitor facilities in New Zealand (NZ). However,
since the demise of JHAS, the majority of its heavy maintenance is done in NZ and Portugal, and
its in-house maintenance workforce runs out to only around 350, occupied solely in line
maintenance.30 Virgin’s announced intention to take on 32 new apprentices over four years is
welcome, but is about the same as Qantas’s annual intake for 2013. There seems to be little
prospect of its making a significant direct contribution either to AME employment in Australia,
or to the development of the workforce, especially given the growing representation on its share
register of overseas companies, some of whom have an interest in extending the market share
26
According to Qantas sources, the restructuring of maintenance was “one of the main factors” in this
turnaround. In the 18 months to June 2015, the Engineering Division alone accounted for $120 million in
savings, largely through the abolition of 900 full-time jobs. Schofield, 2015.
27
Sarina and Wright, 2015.
28
Australia Philippines Business Council (APBC), 2015.
29
Creedy, 2014.
30
Freed, 2013.
22
of their own maintenance offshoots.31 A strong campaign is required to bring heavy
maintenance of Virgin’s 81 B737s onshore. In September 2014, Virgin Australia was reportedly
evaluating the possibility of a joint purchase of the B787 or alternatively the A350 XWB, and
there may be scope for negotiating the onshoring of the maintenance Virgin’s subsidiary Tiger is
maintaining its 14 A320s in Melbourne.
2.5 Conclusion
It remains an open question how the global aviation industry will respond to the escalating skill
shortage, which is charted more fully in Chapter 10. Essentially, there are two possible scenarios.
In the one, nations see the shortage coming and reinvest in infrastructure and human capacity
to meet it. In the other, they come to view the shortage as a fact of life, or at any rate not a
sufficiently serious problem to justify the cost of responding adequately, and instead learn to
cope with the consequences of a steady contraction in maintenance capability while aviation
activity continues to grow.
In many parts of the world the MRO industry has passed into a phase of reinvestment since the
global financial crisis (GFC). As aircraft operation and MRO evolved into separate businesses, it
became increasingly obvious that MRO was a major business opportunity in its own right,
attracting a new wave of investment as world economic activity revived. The industry has been
in a ferment of growth and diversification for the last five years, which is evident from all the
main industry publications and newsletters, many of which are referenced throughout this
report. New hubs of MRO activity are rising in countries as diverse as Lithuania and Turkey, while
the US has recognised aviation as a key focus of economic revival, and is rapidly rebuilding its
domestic MRO capability from a low point early this century – helped admittedly by a drastic fall
in blue-collar wages since 2008, but equally driven by a range of Federal, State and local
government incentives, with a determined and well-organised industry lobby constantly at work
on Congress to keep them coming.
With the realisation that these investments are threatened by emerging global skills shortages,
private providers and individual training institutions have become more active in mounting new
training programs, driven primarily by the profit potential. Recent years have seen a
proliferation of training initiatives, of varying quality, at levels from undergraduate degrees in
legitimate universities through to unaccredited private training colleges, many of them in parts
of the world which lack Australia’s tradition of rigorous but work-focused technical education.
Chapter 9 discusses some of these initiatives, undertaken by international organisations.
However, the alternative scenario may still occur in which individual countries (or indeed the
global aviation industry) are unable or unwilling to develop a new skilled workforce of the size
required to handle growing maintenance needs at the levels previously considered acceptable,
and instead adjust to a situation of permanent shortfall. Over time the problem may be
addressed by lowering customer expectations, reducing quality control to bureaucratic process,
lowering qualification standards for the maintenance workforce, and shifting certification rights
from the licensed to the unlicensed (and therefore less well paid) parts of it. In fact, some
elements of this alternative scenario have already been in evidence for some time — in
particular, the levels of time pressure and work intensification experienced by workers in the
industry. Some rather unnerving evidence of its presence may also be found in the 2014 Oliver
Wyman survey, where 9% of respondents in an international sample, asked “What strategies
31
This observation is qualified by the fact that at this stage Virgin plans for MRO development are largely
unknown.
23
have you considered or adopted to combat rising outsourced engine or component maintenance
costs?” responded “Delay or avoid maintenance”.32
In regions where this second scenario is the reality, some evidence of the consequences can be
seen in the first-hand evidence of maintenance practices in certain overseas source countries
which we discuss in Chapter 5.
At this stage, before the skills crisis really begins to affect the more affluent industrialised
nations, it is impossible to tell which of these scenarios will ultimately prevail – or indeed,
whether they will continue to coexist in different parts of the world.
32
Spafford and Rose, 2014, p.4.
24
25
Chapter 3 The Australian MRO Industry
3.1 Introduction
To help identify options for the future development of aircraft maintenance in Australia, this chapter
overviews the way the industry is structured, its changing place within aviation, and its links to the
wider aerospace industry. Using new project data, it also outlines some aspects of the occupation of
aircraft maintenance engineer and issues of workforce development and career planning.
3.2 Industry overview
Aircraft maintenance is classified in Australia and New Zealand as part of the Aircraft Manufacturing
and Repair Services industry, on the basis of similarity in the production function between the
original manufacture and subsequent overhaul of aircraft and components.1 Aircraft maintenance
work also has a strong technical and professional component, as indicated by the Australian
occupational classification “(Aircraft Maintenance) Engineers”.2 Overseas job titles such as
Technician and Engineer signal both theoretical understanding and a professional ethic of integrity
and independence in upholding safety standards.
Figure 3.1 identifies the following types of Australian organisations in which aircraft maintenance,
repair and overhaul (MRO) work is carried out directly, and elements of the supply chain to which
this work contributes, or on which it draws.
Figure 3. 1 Strategic linkages – Australian aircraft maintenance industry and its relationships
3.2.1 Air operators
Air operators are held responsible by the regulator CASA (The Civil Aviation Safety Authority) for
maintenance management, ensuring the continuing airworthiness of their aircraft, owned or leased.
This responsibility cannot be delegated, whether the maintenance is conducted in-house or
outsourced on-shore or off-shore. In the airline sector, much aircraft maintenance in Australia has
1
The Australian Bureau of Statistics (ABS 2006a) singles out aircraft MRO work as an industry where the
factors of production in repair work are “interchangeable” with those of original manufacture. See pp. 29, 129.
2
Australian Bureau of Statistics (ABS), (2006b), p. 379.
25
historically been done in-house, and Qantas still employs an estimated 5,000 engineers —
approximately 40% of the Australian civilian maintenance workforce. With the trend to outsourcing
and off-shoring maintenance work there is a need, currently unmet, to safeguard the pipeline of
maintenance engineering apprentices.
In addition to the four major domestic main route operators, Qantas, Jetstar, Virgin and Tiger Air,
there are approximately 30 regional operators offering regular public transport (RPT) services. Some
are networked to the main carriers, one (Rex) is independent but overseas owned, and others
struggle for viability. Air operators also include the large and diverse General Aviation (GA) sector,
which provides essential regional and rural infrastructure including non-regular public transport,
charter and freight services and the aerial work that supports agricultural, pastoral, mining and
fishing industries, land and oceanographic mapping, the maintenance of power lines, fire control and
medical emergency services. Because of the importance of regional RPT to the national
infrastructure, a 2014 NSW parliamentary regional aviation inquiry recommended that it be deemed
an essential service.3
3.2.2 Third party MROs
The stand-alone Maintenance Repair and/or Overhaul organisation (MRO) has long been the model
for maintenance in the GA sector. In other aviation sectors, the number and range of stand-alone
third party MROs in Australia has grown, as part of a global trend.
Third party MROs operating in Australia may service aircraft components or whole aircraft, and may
be generalists or specialise according to group, category or type of engine, airframe or avionic
system. Some have one site; others operate across a range of ports, and their clients may range from
local to international air operators. Some provide maintenance to clients across the civilian airline,
Defence or general aviation (GA) sectors. They range from completely independent businesses to
tied contractors, with links either forward to aviation clients or backward to manufacturers of
aircraft or components. Some supply one-off installations, upgrades or emergency
repair/replacement services; others provide regular maintenance checks and repair/overhaul for a
smaller range of regular clients. Some are multi-faceted, combining MRO work with their own air
operations, whether regular public transport (RPT), charter or aerial work. Several tender for a
succession of large-scale, long-term contracts with airlines, air service providers, aircraft
leaseholders, or Defence arms, whether supplying ongoing airworthiness and maintenance
management for whole fleets, or working on specialised projects such as the design and installation
of integrated systems, or intensive fleet conversion and refurbishment projects.
The 262 MROs that we were able to identify in the GA sector in 2014 are the reason that GA
operators remain flying. Their role is so critical to regional and rural infrastructure that some
regional and rural airports and local government authorities have provided infrastructure and direct
employment to support local hangars, workshops and licensed engineers.4
3.2.3 Aircraft OEMs, component OEMs and tiers of manufacturers
Australia has participated in the global trend, discussed in Chapter 2, towards the increased entry of
OEMs (Original Equipment Manufacturers), of both aircraft and components, into the aircraft
maintenance market, based on though-life-service or afterservice maintenance contracts. They may
conduct the maintenance in-house or devolve some of this work to approved sub-contractors or
agents, including stand-alone MROs.
3
New South Wales Parliament, Legislative Council, 2014, p. 6,
4
NSW Parliament Legislative Council, 2014, pp. 71ff.
26
Chapter 3 - The Australian MRO Industry
The two largest global aircraft OEMs, Boeing and Airbus, have significant in-house MRO operations
in Australia, sketched in Section 3.4 below. Also briefly sketched are the operations of a range of
local and international component OEMs undertaking both research and development (R&D) and
MRO work. Several innovative European and United States (US) aerospace manufacturing firms have
acquired or partnered with MROs and OEMs in Australia to establish a South Pacific base. These
technological partnerships are apparently not hampered by the tyranny of distance, leading us to
challenge the assumption that logistical considerations pose a barrier to the integration of Australian
MROs into global networks.5
The manufacture of parts other than those produced by OEMs is strictly regulated through the parts
manufacturing approval (PMA) process of the Federal Aviation Administration (FAA) and bilateral
recognition agreements based on it. OEMs may seek to impose restrictions on the use of alternative
parts: there are debates between air operators and OEMs over the point at which concern for
reputational fallout from safety breaches shades into defence against competition.6
OEMs, as relatively large and innovative employers, are likely to provide stable employment, training
opportunities and possible career paths for maintenance engineers. The Australian aviation and
aerospace industries stand to benefit from the transfer of technology and training expertise implied
by the fact that international OEMs make up 11 of the 36 Maintenance Training Organisations
(MTOs) that have gained Civil Aviation Safety Authority (CASA) accreditation as Part 147 type rating
training providers.7 Nevertheless this type-specific training lies outside the nationally-recognised
system. It is privatised within the OEM and, formally at least, its “certificates of attainment” (type
qualifications) are not transferable. A challenge is to find ways to transfer the expertise embodied in
OEM-dominated type training to the national training system. There is also danger that reliance on
OEM-based type rating training will over time contribute to undermining the national system of
broad-based category training, and to a shift away from airworthiness oversight by independent
license holders and towards manufacturer- and employer-approved training and maintenance
certification.
3.2.4 Aviation business and professional services
Providers of aviation business services who either supply or use MRO services include sellers of new
and used aircraft, charter brokers, private fixed base operators, and an increasing range of wet-lease
fleet suppliers, some also supplying cabin crew and maintenance services, for example for business
jets and helicopters. Other aviation business services include the sourcing of aircraft parts and
accessories: such suppliers need considerable understanding of aircraft and components. Specialist
labour hire firms supply aircraft maintenance staff at the insecure end of the MRO labour market.
The failure of John Holland Aviation Services (JHAS) at Avalon in 2014 8 is perhaps an indicator of the
need for MRO labour supply to be operationally embedded in the aviation/aerospace industry and
its training and career pathways.
Aviation MRO-linked career paths include the supply of professional and supervisory services in
regulatory, administrative and maintenance management roles. Importantly for the future of the
5
This claim has been made in relation to the B787 Dreamliner, but as Boeing Aerostructures Australia is the
sole supplier of some airframe components, so it could become their repairer.
6
The International Air Transport Association (IATA, 2012 pp. 21-22) has recognised both the safety and
efficiency issues in the use of components subject to PMA and designated engineering representatives (DER)
approval, and produced guidance designed to address what it argues are protective pressures from OEMs to
make through-life maintenance contracts conditional on the use of more expensive original components.
7
CASA, 2015b.
8
O’Sullivan, 2014.
27
industry and occupation, professional services include the provision of maintenance training and
maintenance support for flight training organisations. A key theme of this report is the need to
secure the ongoing supply of qualified aeroskills educators and assessors in nationally registered
training organisations (RTOs), in order to ensure an ongoing supply of qualified and licensed
engineers and to take advantage of the opportunity to make Australia an Asia-Pacific training hub.
Other linked professional services, requiring varying qualifications and levels of technical skill,
include maintenance and aeronautical engineering, engineering drafting, precision tooling, process
management, testing, weighing, calibration, and the design and approval of structural modifications
to aircraft.
After this scoping of the terrain within which Australian MRO work is located, the next step is to try
to estimate the size and dimensions of its different demand, supply and utilisation elements.
3.3 The demand side – a mapping of Australian aircraft and air operators
A picture of demand for MRO services can be gained by bringing together a count of civilian aircraft
and their main characteristics, an estimate of the intensity of their use, and analysis of the
maintenance strategies of air operators.
3.3.1 Counts of civilian aircraft, classified by weight and age
One indicator of the demand for MRO services is a count of VH aircraft on the CASA register.9 Sorting
these aircraft by size and age provides a clearer indicator of demand, based on generations of
technology and also of cycles of demand for heavy maintenance overhaul.
Determining which of the 15,300 aircraft on the CASA register in August 2015 should be included in
such a count, and how they should be classified, required a number of judgments that may influence
the conclusions drawn. Our count was based on numbers and types of engines and so automatically
excluded 1,390 gliders and manned balloons. It was also based on MTOW (maximum take-off
weight), and included 1,443 aircraft weighing less than those in CASA’s range for GA (681–5,700 kg).
An unknown number of other aircraft on Recreational Aircraft of Australia (RA Aus) registration
category of up to 680 kg MTOW were however not counted.10
Table 3.1 provides a breakdown of the age structure of the commercial fixed wing fleet – that is,
international, main-route domestic and regional RPT and freight aircraft.11
9
All CASA VH-registered aircraft were included to reflect coverage by ICAO SARPs (the International Civil
Aviation Association Standards and Recommended Practices).
10
In interviews undertaken for this study, concern was expressed about a “regulatory twilight zone” whereby
some aircraft registered with RA Aus fall outside the CASA registry and safety standards. Also included in the
count were over 927 amateur built aircraft within the standard GA MTOW range. Some very old aircraft were
included, such as DC3s, still used for tourist flights, or those re-engined with turboprops, for example for use in
Antarctica. Warbirds and others in historic collections, requiring highly specialised maintenance, were not
counted. The existence of an aircraft on the CASA register does not necessarily mean that it is still being flown.
11
The word “commercial” is used to describe the fleet above 5,700 kg MTOW, corresponding to the ICAO’s
term “commercial – other” and the ARSA (Aeronautical Repair Station Association) term that excludes GA and
business jets operated by their owners for internal company use.
28
Table 3.1 Commercial fixed-wing fleet on CASA register, August 2015, by age
Age in August 2015 and year range of manufacture
MTOW and engine
configuration
Over 100,000 kg
turbofan
Examples
A330, A380. B777,
B787
% in age range
50,001 –100,000 kg
turbofan
A320, B737, B717,
Embraer 190
% in age range
20,001–50,000 kg
turbofan/turbojet
% in age range
20,001–50,000 kg
turboprop
% in age range
20,001–50,000 kg
piston
Fokker F28; BAE
/Avro, Bombardier –
BD-700
Bombardier DHC8402; ATR; Fokker
F27
Fokker SP-2H
6–10 yrs
0–5 yrs
(2010–
2015)
(2005–
2009)
% in age range
5,701 –20,000 kg
multi turboprop
% in age range
5,701–20,000 kg
single turboprop
DHC-8-102 /315,
SAAB, Embraer
EMB-120
Air Tractor 802
% in age range
5,701–20,000 kg
single/multi piston
(1995–
2004)
Cessna CC, Hawker
Beechcraft
Type
group as
% of
fleet
8%
22
25
7
85
36%
26%
29%
8%
100%
116
79
70
10
275
42%
29%
25%
4%
100%
5
12
31
58
106
5%
11%
29%
55%
100%
25
20
3
15
62
40%
32%
5%
24%
100%
0
1
0
5
6
83%
100%
27%
Learjet, Cessna CC,
Bombardier CL-600
(before
1995)
Total in
type
group
>20 yrs
31
% of type group
5,701–20,000 kg
turbofan
11–20
yrs
2
21
32
52
107
2%
20%
30%
49%
100%
10
10
91
114
225
4%
4%
40%
52%
100%
25
8
27
3
63
40%
13%
42%
5%
100%
0
0
1
36
37
3%
97%
100%
% in age range
Totals
214
173
280
300
966
Age range group as
% of total
22%
18%
29%
31%
100%
Source: CASA, 2015a
MTOW: maximum take-off weight
29
27%
20%
12%
1%
10%
22%
6%
4%
100%
Broadly,
•
There were 85 wide-bodied international route aircraft such as the Airbus A330 and A380
and the Boeing B777 and B787 Dreamliner; of these, 36% were less than 5 years old and 62%
had been manufactured since 2005;
•
There were 275 aircraft in the domestic main route fleet of aircraft such as the A320 and
B737 and the smaller B717s used on lower-volume Canberra and Hobart flights; of these a
quarter had been built since 2010 and 42% since 2005; some also used for flights to New
Zealand and Asia-Pacific ports within range;
•
Of the regional fleet of 106 turbofan aircraft in the 20,001–50,000 kg MTOW range, fully
84% were at least 11 years old. On the other hand, of the 62-strong regional turboprop fleet;
used for economy on shorter routes and typically seating 60–100 passengers, 75% were less
than 10 years old, predominantly Dash-8s, and the 15 post-2010 ATRs operated by Virgin;
•
The term “commuter” – a Certificate of Airworthiness category— describes the 5,701 to
20,000 kg MTOW category in passenger transport. It encompassed viable regional routes
using Embraers and Bombardiers seating up to 30 and the Rex fleet of 50 SAAB turboprops,
all around 20 years old. The lower end included RPT and other passenger operations not
regularly scheduled but publicly accessible. Such services used smaller aircraft seating
around 9–12. Responding to rural demand for scheduled services based on aircraft with
under 9 seats, currently debarred by air safety regulations from RPT operation, CASA in 2014
signalled a new combined RPT/charter category, “passenger transport activities”. Such
aircraft would need to be maintained by Part 145 maintenance organisations.
Table 3.2 provides an estimate of the Australian GA fleet, drawn from the CASA database. Much GA
sector MRO work is focused on ensuring the continued airworthiness of pre-1995 single-piston
aircraft. Such work is important in its own right for rural and regional infrastructure, including freight
and logistics, emergency fire services, oceanographic work, and medical services. GA maintenance
calls for the resourcefulness, trouble-shooting skills and breadth of understanding to work across a
range of aircraft types. Historically, GA as served as a training ground for other aviation sectors,
including in deep maintenance and aircraft refurbishment. There is also a need for renewal, if GA is
to play the vibrant role in regional development that it plays in the United States (US).
Finally, the rotary wing sector has shown a relatively high rate of growth and renewal, with 17% of
the fleet under five years old and another quarter ten years old or less (Table 3.3). As in the GA fixed
wing sector, the main concentration of aircraft was in the lighter MTOW single piston engine sector,
but in the case of helicopters, the fleet was younger. Even where the basic structural design of a
helicopter type is, there has also been an ongoing tendency to the installation of technological
updates such as automatic stabilisers and navigation aids that arguably are becoming the industry
standard.12
Statistics on fleet age and on waves of growth and acquisition serve not only as indicators of future
patterns of technological demand that will be placed on maintenance engineers, but also as
indicators of waves of demand for the different types of maintenance checks, from A to D. For
example, where a high volume of aircraft has been acquired in the past five years, the next five years
will see these aircraft move into their first heavy maintenance cycle. Table 3.4 and Figure 3.2
demonstrate the use of “renewal rate” indicators to help estimate maintenance demand. The
12
Rotor & Wing International, 2015, and correspondence with industry training provider, 1 September 2015.
30
civilian aviation sectors are arguably so different from each other that it makes little sense to
compare their renewal rates against some assumed standard of technological development. New
avionic equipment may be installed in older airframes, and advances in non-destructive testing of
engines or landing gear, and in recoating may be applied to older aircraft. There have been
generational shifts, such as composite technology. The regional sector currently faces a strong
demand for upgrading, both in terms of fleet age and to meet the diversification of community
demand noted above.
Table 3.2 General Aviation fixed wing aircraft in the CASA register, August 2015,
by category and age
Age in August 2015 and year of manufacture
Engine
configuration
Twin turbofan
0–5 yrs
(2010–
2015)
6 to 10
yrs
11 to 20
yrs
21 to 40
yrs
(2006–
2010)
(1996–
2005)
(1976–
1995)
Type
group as
% of all
GA
>40 yrs
Total
(Pre1975)
11
7
8
9
2
37
30%
19%
22%
24%
5%
100%
Twin turboprop
16
31
27
146
16
236
% in each age range
7%
13%
11%
62%
7%
100%
Twin piston
37
27
24
689
458
1,235
% in each age range
3%
2%
2%
56%
37%
100%
1
5
0
0
0
6
17%
83%
0
0
% in each age range
Twin diesel
% in each age range
Single turbofan
0
% in each age range
Single piston
% in each age range
0
0
19
1
20
95%
5%
100%
5
23
29
17%
79%
100%
472
691
1017
3174
3295
8,649
6%
8%
12%
36%
38%
100%
5
3
8
63%
37%
100%
537
762
1076
4042
3795
5%
7%
11%
40%
37%
% in each age range
TOTAL
1
3%
Single diesel
2%
12%
0.1%
100%
% in each age range
Single turbojet
0.4%
Source: CASA, 2015a.
31
10,212
0.2%
0.3%
85%
0.1%
100%
Table 3.3 Helicopters on CASA register, August 2015, by MTOW, configuration and age
Age in August 2015 and year of manufacture (Number and % in age range)
Engine
configuration
MTOW
>5,700 kg
Up to
5,700 kg
All <5,700
kg
0-5 yrs
(2010–
2015)
Multi
turboshaft
Single
turboshaft
Single
piston/diesel
Total
6 to 10
yrs
11 to 20
yrs
21 to40
yrs
(2005–
2009)
(1995–
2004
(1975–
1994
Type
group as
% of
total
>40 yrs
Total
(pre1975)
0
67
9%
103
1
193
62%
20%
53%
1%
62
57
273
94
541
9%
10%
11%
11%
50%
17%
255
443
306
234
92
19%
33%
23%
18%
7%
361
554
403
630
187
19%
19%
30%
30%
36
14
1
16
54%
21%
1%
24%
15
35
39
8%
18%
55
17%
26%
9%9%
3%
1330
62%
2,135
100%
100%
Source: CASA, 2015a
Table 3.4 Aircraft aged <5 years in August 2015, by category
Total VH-reg
in category
% of category
aged <5 years
31
85
36%
116
275
42%
Regional (20,001–50,000kg MTOW)
30
174
17%
FW 5,701–20,000 MTOW
37
432
9%
GA 2-engine turbofan
11
37
30%
GA 2-engine turboprop
16
236
7%
GA 2-engine piston (incl Diesel)
37
1237
3%
GA 1-engine turboprop
50
335
15%
GA 1-engine piston
472
8657
5%
Rotorcraft
361
2135
17%
1161
13603
9%
Category
Aged <5
years
Widebody (over 100,000kg MTOW)
Single-aisle (50,001–100,000kg MTOW)
Total
Source: Tables 3.1 to 3.3
32
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Maximum takeoff weight. kg
Source: Calculated from Tables 3.1 to 3.3
2TF = twin-engine turbofan, 2TP = twin-engine turboprop, 2P = twin-engine piston,
1TP= single-engine turboprop, 1P=single-engine piston
Figure 3.2 Five-year renewal rate (%) by category
“Renewal rate” indicators are thus more meaningful at sector level than as measure of aggregate
maintenance demand across sectors. Table 3.4 and Figure 3.2 use a renewal rate indicator based on
aircraft aged 0–5 years to show that the highest rate of new aircraft acquisition over the past five
years has been in domestic main-route airlines. Figures 3.3 and 3.4 provide further breakdowns of
the aircraft categories with the highest percentages of aircraft under 10 years old and over 20 years
old.
80%
70%
60%
50%
40%
5-10 yrs
30%
0-5 yrs
20%
10%
0%
Widebody
Single-aisle
Regional
turboprop
GA twin
turbofan
Source: Tables 3.1 to 3.3
Single
Multi
turboprop turboshaft
5,701-20,000
rotor
Regional turboprop = 20,001 to 50,000kg MTOW
Figure 3.3 Categories with highest percentages of aircraft less than ten years old
33
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
>40 yrs
21-40 yrs
Source: Calculated from Tables 3.1 to 3.3
Regional = 20,001 to 50,000 kg MTOW; Commuter = 5,701 to 20,000 kg MTOW
Figure 3.4 Categories with highest percentages of aircraft over 20 years old
As a way of estimating the overall volume of demand for maintenance services, simple aircraft
counts cannot be used in aggregate or even for comparison across aviation sectors. The personhours involved in a maintenance check, component overhaul or aircraft rebuild in the GA sector is
very much less than that required for an airliner. Anecdotal estimates of the person-hours required
for the D-checks of a single wide-bodied airliner range from a conservative 40,000 person-hours to
75,000 person-hours for B747s and typically such checks take several months to complete. The
demand for maintenance services is a function of both number of aircraft and the frequency and
distance they are flown. Manufacturer claims that D checks will be less frequent on next generation
airliners are addressed in later chapters.
3.3.2 Estimates of intensity of aircraft use
One very rough indicator of intensity of aircraft use is the volume of civilian air traffic in Australia,
based on movements of civilian aircraft through Australian airports monitored by Airservices
Australia This measure however includes international flights and does not include GA traffic using
regional airports and rural airfields without control towers.13
Although the broad Airservices Australia category cut-offs differ from those used by CASA, widebodied aircraft operating in Australia are well over 136,000 kg MTOW, aircraft and so numbers in
both categories represent the volume of international traffic.
The Airservices Australia 7,000 to 136,000 kg category includes both domestic and regional singleaisle aircraft, but excludes many of the low-volume “commuter” aircraft discussed above. At the
upper end of the weight range, between 70,000 and 90,000, the A320, A321 and B737-800 have the
range to provide services to New Zealand or South East Asian ports and to be ferried there for
maintenance. Nevertheless, they are primary candidates for onshore maintenance, alongside the
lower-weight regional “and commuter” aircraft that are definitely maintained here. It is noteworthy
then that this weight range has accounted for the greatest increase in Australian monitored air
traffic over the past decade (Table 3.5).
13
Calculated from Airservices Australia,2015.
34
Table 3.5 Changes in monitored volume of annual aircraft movements, Australian airports, 2006 to
2014
MTOW
Change 2006 to 2014
>136,000 kg
7,000 to
136,000 kg
<7,000 kg
Helicopters
Military
Total
14%
31%
-21%
69%
51%
2%
Source: Calculated from Airservices Australia, 2015.
Monitored traffic in the under 7,000kg MTOW captures some GA traffic and low-volume commuter
services to capital and regional hub airports, but it cannot be taken necessarily to reflect the volume
of small aeroplane and helicopter traffic through rural airports not monitored by air traffic control,
or those using private landing strips. The 21% decline in monitored traffic volume in this weight
range may reflect trends towards the exclusion of GA aircraft from major airports, but it may also be
linked to the differential trends in changes in aircraft numbers by sector discussed earlier. The
increased volume of military aircraft movements reflects traffic in shared airports such as Townsville,
and may also reflect the role of civilian contractors in undertaking Defence maintenance projects.
3.3.3 Australian Air Operator Certificate holder maintenance strategies
A third way of estimating trends in maintenance demand is by identifying the extent to which air
operators have been performing their maintenance in-house or by contracting it out, and
particularly whether the work is done on-shore or off-shore.
In February 2015, the CASA website database listed 936 Australian Air Operator Certificate (AOC)
holders subject to its regulation, and 80 foreign operators over whom it had safety oversight. This
list included all Class A air operators (airlines and GA operators approved to carry passengers on
scheduled flights and medical airlift carriers) and some Class B (other GA) operators. Of the
Australian AOC holders, 141 were identifiable from their websites as carrying out MRO work, either
doing some at least of their own maintenance, or offering third-party maintenance as part of a range
of services. Many of the remaining 795 AOC holders apparently relied on third-party MROs. Not
included in this count were operators using aircraft for private or on-farm purposes, at least some of
whom used MROs for 100-hours checks, maintenance and any repairs.
The following analysis shows that considerable heavy maintenance has continued to be done
onshore in Australia, that the fastest-growing areas of heavy maintenance demand are those in
aircraft type groups and categories most suited to onshore maintenance, and that there may be
further scope for reversing recent offshoring trends.
Airlines and freight carriers operating internationally
Table 3.6 summarises the key recent maintenance strategies of Australian air operators with
significant international operations. Aircraft most likely to be sent offshore for heavy maintenance
are the wide bodied aircraft on the CASA register, almost half of which were shown (Table 3.1) to
have been under ten years old in August 2015. The time between heavy maintenance checks for
newer generation wide-bodied aircraft such as the B787 is expected to be double that for older
aircraft.
In early 2015 Qantas entered a ten-year contract with Lufthansa Technik Philippines for the heavy
maintenance of their A380 fleet.14 They had retired all but one 767 and cited the phasing out of
14
Australia Philippines Business Council (APBC), 2015.
35
B747s as justification for offshoring residual heavy 747 maintenance.15 On the other hand, Qantas
has undertaken a major onshore cabin refurbishment project for their A330 fleet in Brisbane, due for
completion in 2016. Virgin Australia’s 5 B777s were maintained by SIA in Singapore and maintenance
of their 6 A330s was sent offshore after the JHAS Avalon contract fell apart in 2014.16 As only 13
weeks’ training is thought to be required to transition from the A330 to the A380, there is a basis for
national capability on the latter, Virgin Australia has built the hangar space to maintain its small fleet
of A330s and B777s in Sydney, and the goal of reversing the loss of Virgin A330 contracts from
Avalon is one worth pursuing.
Table 3.6 Main operators of aircraft >100,000 kg MTOW, by maintenance strategy, Australia, 2015.
Operator
Aircraft
Airbus A380-842
Qantas
Airbus A330202/203
Comment
20-year lease on hangar at LAX for layover maintenance; Australian
staff?
Maintenance off-shored: Base maintenance contract with Lufthansa
Technik Philippines to 2023
Heavy maintenance conducted in new Brisbane facility since 2010
Airbus A330-303
Jetstar
Virgin Aust
Boeing B767338/381F
Upgraded on-shore in 2012; due to be retired except 2 assigned to
Express Freighters
Boeing B74748E/438
To be phased out; heavy maintenance withdrawn from Avalon to offshore locations 2014
Airbus A330 -202
Currently maintained in Singapore
Boeing B787-8
Qantas order for 14 larger 787-9, proceeding with option for 50
Airbus A330-243
Withdrawn from JHAS Avalon
Boeing B777-3ZGER
2008–2013 contract with SIA for B777 maintenance; use of SIA
subsidiary Aircraft Maintenance Service Australia; construction of
Sydney wide-bodied heavy maintenance hangar 2011
Sources: APBC, 2015; Australian Aviation, 2014a; Chong, 2014; Freed, 2015; O’Sullivan, 2014, 2015; Qantas
Airways, 2010; Virgin Australia, 2008, 2011.
Domestic/short haul airlines and freight carriers
Table 3.7 summarises, current at 2015, the maintenance strategies of significant groups of Australian
domestic main route operators of single-aisle aircraft such as the A320, A321 and B737, all with a
MTOW between 70,000 and 90,000kg. By 2015, of the 275 such aircraft listed on the CASA register,
79% had been built in the last ten years (Table 3.7).
Qantas was conducting heavy maintenance of its 65 B737s at a newly consolidated three-line
Brisbane facility: the taking-on of 30 apprentices, while welcome, does not offset the 535 job losses
resulting from the closure of Tullamarine and Avalon wide-bodied heavy maintenance facilities.17
Jetstar Airways, who in 2015 operated 53 Airbus A320s, opened a new multi-million dollar heavy
maintenance base in Newcastle as part of its move to an all A320 fleet for short haul domestic and
international operations. This generated 50 new engineering jobs, including new apprenticeship
15
O’Sullivan, 2012; Qantas Airways, 2010; Qantas Airways, 2013.
16
Virgin Australia, 2008; O’Sullivan, 2014.
17
Qantas Airways, 2013.
36
positions, and there is the prospect of using this facility to support some of Jetstar’s projected future
A320-based growth in both Australian and some international markets.18
The Virgin 80-strong B737 fleet and two A320s had historically been maintained partly in New
Zealand (NZ) and partly by JHAS. The opportunity to onshore more of this work, along with heavy
maintenance on A330s and18 Embraer EMB190-100 regional/main route aircraft, was lost in 2014,
when Virgin cancelled its Avalon contract with JHAS, resulting in 125 redundancies. There is
potentially hangar and employee capacity to bring some of this work to Australia, by building
capacity. Tiger Airways (Virgin’s LCC) operated 14 Airbus A320s in 2015. BAE Systems, the aerospace
and Defence contractor, in what it described as a move into “adjacent markets”, in 2013 signed a
contract to provide base maintenance for Tiger Airways’ A320s through to 2018, subsequently
extending this agreement to include A320 line maintenance at Melbourne, Sydney and Brisbane.
There is considerable scope and capability for the further onshoring of heavy maintenance of these
significant parts of the Australian-registered fleet.
Table 3.7 Aircraft 50,001–100,000 kg MTOW - operator and maintenance provider, Australia, 2015.
Operator
Aircraft (numbers in CASA
Register July 2015)
Maintenance
Qantas
67 Boeing 737NG (600–900)
Heavy maintenance project in house, Brisbane
Express Freighters
(Qantas)
4 Boeing 737 Classic
Jetstar
Virgin Australia
Maintained in-house Sydney
(300 to 500)
53 Airbus A320
Maintained in-house at Newcastle from 2015 –
scope for A320/321 work for Asia-Pacific
subsidiaries?
6 Airbus A321
Maintained offshore
2 Airbus A320
Maintained offshore
80 Boeing 737NG (600–900)
18 Embraer
Heavy maintenance mostly in NZ
Tiger Airways
14 Airbus A320
Base maintenance by BAE Systems, Melbourne;
line maintenance BAE Systems, Melbourne,
Sydney, Brisbane
Skytraders
2 Airbus A319
Antarctic (& other govt) contracts
Air Nauru
6 Boeing 737NG (600–900
Maintained in Brisbane
Tasman Air Cargo (DHL)
1 Boeing 757
Maintained in NZ
Sources: CASA, 2015a; BAE Systems, 2014; Chain, 2005; Creedy, 2013a; Jetstar, 2013; O’Sullivan, 2012, 2014;
Qantas Airways, 2013.
Regional RPT/scheduled charter and freight services
Table 3.8 summarises the maintenance strategies of some of the 30 regional operators identifiable
in July 2015. In 2015, the regional RPT sector included 168 jets, turboprops and 6 legacy piston
engine aircraft in the type range 20,000 to 50,000 kg MTOW range and the slightly heavier
QantasLink fleet of 18 B717s, the latter purchased since 1999.
Virtually all these regional aircraft were maintained onshore, either in-house or by independent
third-party MROs, sometimes on the basis of tied contracts. Some smaller regional and rural
communities are losing their regular air services, if they cannot guarantee the annual passenger load
18
Chain, 2005.
37
of 30,000 seen by operators as necessary for viability. In NSW by 2014, Rex was the only regional
airline left in with Qantas, Jetstar, Virgin and most recently Tiger Air providing the remaining regional
RPT services.
Operational consolidation of scheduled regional routes meant purchases, particularly through 2000–
2009, of fleet additions at either the larger or smaller ends of the weight ranges listed above.
Charter operators have been seeking to move into the resulting gap, regional airlines have acquired
low-volume subsidiaries, or failed airlines have revived in smaller form, perhaps through employee
buyouts (Fly Pelican). The CASA relaxation of the RPT/Charter operator boundary will require
common maintenance safety standards and a resolution of issues of licensing scope.19
Table 3.8 Examples —regional RPT operators, Australia, 2015.
Operator
National Jet Systems/
Cobham/QantasLink – CAMO, Pt
145 AMO
Qantaslink (Sunstate, Eastern
Airlines) – CAMO, Pt 145 AMO
Virgin Regional (formerly
Skywest) – CAMO, Pt 145 AMO
Regional Express (Rex)/Air LinkCAMO and Part 145 AMO
Aircraft (numbers in CASA register,
July 2015)
Maintenance
18 Boeing 717-200 (53,000kg MTOW)
To be maintained in-house in
Canberra 2015–2020
48 Bombardier Dash-8
(16,000–29,000 kg)
14 ATR72–212A (22,000 kg MTOW, 68
seats) 8 Fokker F27 turboprop (20,000kg
MTOW)
13 Fokker F28 turbofan (30,000kg
MTOW, 100 seats)
47 SAAB (22,700 kg MTOW)
To be maintained in-house,
Tamworth 2014–2019
ATR72 maintained by Toll.
Virgin Regional also operate 2
Airbus A320
In-house maintenance – offers
apprenticeships
10Dash-8 (29,000 kg MTOW, 70 seats)
Skippers WA – CAMO and Part
145 AMO
7 Fokker F28/Fairchild) (c. 7,000kg
MTOW)
6 Embraer (30 seat)
Dash-8s some over 20 years
old; Total fleet 27
4 Cessna 441 (10 seat)
Alliance Airlines Qld – CAMO and
Part 145 AMO
28 Fokker F28 Turbofan
7 Fokker F27 turboprop
Maintained in-house in
Brisbane
1 Embraer 120
Hardy/Fly Tiwi (NT) – CAMO and
Part 145 AMO
Fairchild SA227 (19 seat)
22 Cessna
3 Beech
Sources: CASA, 2015a; airline and aircraft manufacturer websites
19
NSW Parliament Legislative Council, 2014, p. 16.
38
Maintained in-house
Examples of regional airlines and subsidiaries operating aircraft close to the GA boundary are:
•
•
•
•
•
Pel-Air – Rex subsidiary; continuing airworthiness management organisation (CAMO) and
Part 145 approved maintenance organisation (AMO) – operates small 18 Bombardiers,
Learjets, and Hawker Beechcraft; has access to Rex SAABs
Capiteq (Air North NT) – now 85% owned by Bristow — CAMO, uses ties maintenance
contractor Aircraft Logistics; operates 9 Embraer 120-ER (c. 20,000kg MTOW, 30 seat) and 3
Fairchild SA227-DC (7,000 kg MTOW)
Airlines of Tasmania (Par Avion) – CAMO and Part 145 AMO; operates a mix of 23 single/twin
piston - Cessna 172, Beech 76, Pilatus, Piper, AeroCommander; maintained in-house
Hinterland Queensland – CAMO & Part 145 AMO); operates a mix of 11Cessna 208 and
Beech B200; hangar at Cairns is a GA MRO offering modifications
West Wing Queensland – CAMO which outsources all maintenance; operates a mix of 27
single/twin piston engine and turboprop aircraft. Mix of 27single/twin piston and turboprop
aircraft (Cessna 208, 208B, Beech B200 and Baron, Pilatus BN, Raytheon 1900, up to 19
seats, 7,700 kg MTOW.
The case of Cobham/Qantaslink illustrates the role of state and local governments, airports and
airlines in working together to support the stabilisation of MRO capacity. Qantas provides regional
services through the QantasLink network of subsidiaries and tied contractors. This network
incorporates Sunstate and Eastern Australian Airlines, which operate a fleet mainly of turboprops in
the eastern states, while National Jet Systems (trading as Cobham Aviation Services) operates
Qantas’ national regional jet network, supplying pilots, cabin crew, operations/management staff,
and line and base maintenance technicians for the fleet of Boeing 717 jets, BAe regional jets and
Bombardier Dash-8s. National Jet Express Pty Ltd (trading as Cobham Regional Services) also
provides military and civil customers with services that include a “turnkey” charter fly-in-fly-out
(FIFO) service, and a freight service (Australian Air Express). In response to the mining boom, in 2011
QantasLink opened a new subsidiary, Network Aviation, at Perth airport, operating both Dash 8Q400s and Boeing 717s.20
In regional aviation, some Qantas outsourced operations are being brought back in-house,
particularly where governments provide some financial support. In 2015, Cobham announced the
return to Qantas of the heavy maintenance of 18 Boeing 717s in upgraded facilities at Canberra
International Airport. Funding support from the Australian Capital Territory (ACT) government was
expected to bring a return of $5m per annum to the local economy. Maintenance checks on the
B717 are reported to be required every 2 years, each taking 28 days or 5,500 person-hours, creating
an estimated 40 maintenance jobs.21 Moreover, at Tamworth Regional Airport, Qantas has opened
and expanded an engineering and heavy maintenance facility employing approximately 100 staff,
including 62 skilled engineers, to maintain the QantasLink fleet of 59 Dash-8 turboprops. Investment
by the Tamworth local government and Qantas to build a second hangar was boosted by the New
South Wales (NSW) government.22
General aviation – charter, corporate jets, helicopters and aerial work
As an example of changing roles and relationships in this sector, Bristow Helicopters Australia, an
affiliate of United Kingdom (UK)-based Bristow Group Inc, has CAMO status and is authorised by
20
Similarly, Virgin acquired Skywest Airlines in Perth.
21
Australian Broadcasting Corporation (ABC) News, 2015a.
22
Australian Aviation,2014b; NSW Parliament Legislative Council, 2014.
39
CASA under Civil Aviation Safety Regulation (CASR) s21M to approve the design of modifications and
repairs. Bristow operate 31 helicopters and employ 500 staff, specialising in FIFO and equipment
transport to offshore oil and gas fields. In 2011 they partnered with Lockheed Martin to develop a
rotary-wing training capability for Royal Australian Navy and Australian Army aircrews. Bristow also
provide maintenance and logistics support to the Republic of Singapore Air Force helicopter fleet at
Oakey Army Aviation Centre. In February 2015, the company moved into fixed-wing operation,
taking over an 85% share in Air North, the largest operator across the northern part of Australia. This
is a further instance of a realignment between the GA and RPT sectors, and also of Defence and
civilian operations, again with implications for MRO activity and training.
3.4 The supply side – a mapping of the Australian MRO industry
We turn now to an overview of MRO activities in Australia, identifying the role of both airlines and
third-party providers, as well as providers of maintenance training and other regulated activities.
Table 3.9 summarises types of MROs and related aviation and aerospace organisations listed by
CASA in 2015, based on activities for which they have regulatory approval. Under CASR Part 42,
every AOC holder in the Australian RPT sector is required to have an approved plan for managing the
continuing airworthiness of its aircraft: in most cases RPT carriers manage their own plans in-house,
and are responsible for airworthiness even when the administrative management is delegated to a
third-party organisation.
MROs must transition to Part 145 AMO status by the end of 2015 if they are to provide maintenance
services for aircraft or aeronautical products operating in the RPT sector. Table 3.9 indicates that
some international airlines operating into Australia have gained CASA Part 145 approval. Some
airlines in Table 3.9 have gained CASA accreditation as Part 42 CAMOs, but are not themselves Part
145 AMOs. Such airlines must be outsourcing all their line and base maintenance, because RPT
operators are obliged to have Part 145 approval to carry out maintenance. Tiger Air is a case in
point: it contracts maintenance to BAE Systems, one of the civilian contractors indicated in Table 3.9.
This table confirms however that most airlines still conduct at least some of their maintenance work
in-house and may also carry out third-party maintenance work for other operators. The gap between
the number of regional airlines with Part 42 or Part 145 and the total number of such AOC holders
(there are currently 30 regional airlines freight carriers) reflects not only the outsourcing of
maintenance but the present fluidity between regional RPT and charter for some operators on lowvolume routes.
Nevertheless, Table 3.9 also indicates the rise of third party MROs with Part 145 AMO status. 2015 is
still a transition year in which those MROs seeking to work in the RPT sector may complete their Part
145 expositions, and there may also be MROs currently working on components for both RPT and
GA aircraft who do not plan to transition to part 145: there is no requirement that they amend their
Civil Aviation Regulation (CAR) 30 certificates to remove capability to maintain Class A aircraft and
such arrangements are still under consultation. On the other hand, 17 MROs whose current work
appears to be mainly on small GA aircraft have transitioned to Part 145, perhaps reflecting the move
of some charter operators into more regular flights, as discussed above.
Of concern is the small number of Part 147-approved maintenance training organisations. To provide
category training, it is necessary to be a Recognised Training Organisation, working within the
Australian Qualifications Framework, as well as a CASA-recognised Part 147 MTO. Most of the Part
147 approvals for training are for specific aircraft types, not for category training, and are conducted
by the manufacturer or by global providers such as CAE or Flight Safety International.
One of the central issues addressed in later chapters is the need for a restructuring and expansion of
Australian maintenance training in the face of four challenges. The first challenge is a declining
participation of airlines in the apprenticeship system, perhaps linked to trends towards offshoring
40
Table 3.9 CASA-approved organisations, May 2015
Overseas airline
Australian airline/freight
Part 42
CAMO
Part 145
AMO
Part 147
Category MTO
Part 147
Type MTO
S 21M
Authorised
Person
4
9
0
1
0
7
4
0
2
0
Regional airline
17
14
0
1
0
GA air operator
2
2
0
0
0
Australian independent 3rd party MRO
7
53
0
2
6
Australian GA MRO
0
17
0
0
1
Overseas MRO
2
26
0
1
0
Civilian contractor
0
2
0
1
0
Defence/civilian contractor
1
2
0
1
2
Aust OEM or branch of offshore OEM
0
7
0
3
0
CASA-approved offshore OEM
0
9
0
11
0
Australia supply chain manufacturer
0
6
0
0
0
Aviation services - Logistics/parts supply
0
2
0
0
0
Australian RTO
0
0
4
2
0
Other Australian based training org.
0
0
0
4
0
Offshore training organisation
0
0
0
9
0
Professional/engineering services
0
0
0
0
21
40
153
4
36
34
Total
Source: CASA, 2015b, 2015c.
and the growing role of independent MROs and OEMs in the provision of maintenance services. The
second is a perceived need for better alignment between Australian training pathways and the nonairline sector. The third is a question of the relationship of Australian qualifications to international
training standards in a global industry.23 The fourth is a move of training providers into the wider
aviation market, by offering a training mix that covers maintenance, flight training and other aviation
services, potentially to an international market.
The discussion that follows picks up on the strategic and conceptual framework set out in Section 3.2
and is based on a mapping of industry directories and organisations’ websites, and on survey and
interview data produced in the course of the research project on which this study is based. It is
designed to provide concrete case study examples, and some quantitative data, supporting and
illustrating this analysis.
3.4.1 Stand-alone MROs
The term “third party” is used in this report to describe stand-alone or independent MROs working
on aircraft of a range of sizes and complexity or on the components of such aircraft, up to and
including jetliners and including both fixed wing and rotary civilian aircraft. In Tables 3.7, 3.8 and 3.9,
the term “independent third party” is reserved for MROs that provide services that extend beyond
the GA sector. The majority of MROs identified were in the GA sector, with capabilities for work on
aircraft up to 5,700 kg MTOW of varying age and complexity. A minority have tied contracts with one
or several AOC holders. It is hard to determine the exact number of independent third-party and GA-
23
For the first three challenges, see Cannane, no date but circa 2015.
41
specific MROs, because of the difficulty of drawing the line between those working on aircraft in
airport hangars and those working in component overhaul shops. In 2014 we were able to map 345
stand-alone MRO organisations in Australia with verifiable listings in databases and current web
pages.24 Presumably, some of these would have had CAR30 approval to work on aircraft up to
8,000kgs.
In NSW, the main concentration of capital city MROs, both third party and GA, was in Western and
Southwestern Sydney (see Table 3.10). In Victoria, the bulk of maintenance activity occurred at
Tullamarine, Essendon and Moorabbin, with Avalon currently under-utilised. In Queensland, there
was a high volume of both independent third party and GA maintenance organisations up and down
the coast, from Townsville and Cairns to the Sunshine Coast and Gold Coast. In South Australia, MRO
activity was concentrated at both Adelaide and Parafield. In Western Australia, most work took place
either in Perth and Jandakot or in the north-west, servicing mining, oil, pastoral and tourism
operators.
Table 3.10 Stand-alone MROs, Australia 2014
State/Territory
Region
ACT
Total ACT
NSW
Capital
Regional/Rural
Total NSW
Independent 3rd
Party MRO
GA MRO
2
0
18
23
6
44
23
68
2
16
Northern Territory
Total NT
Queensland
Capital
12
20
Regional/Rural
14
59
Total Queensland
26
79
South Australia
Combined SA
6
13
Tasmania
Combined TAS
1
1
Victoria
Total Victoria
15
53
Western Australia
Capital
8
22
Regional/Rural
1
11
Total WA
9
33
84
262
Total Australia
TOTAL AUSTRALIA
Sources: AMROBA, 2015; AIU, 2014; Aviation/Aerospace Australia, 2015; CASA, 2015b; IS-BAH, 2014; SADIG,
2014.
24
The figure of 345 is a conservative estimate: we began a survey of MROs with a list of over 700 but only half
had websites, almost 100 envelopes in the survey mailout were returned as “not at this address” and a handful
wrote to advise that they did no aircraft-related work. At most we could identify a sampling frame of 400, with
345 verifications.
42
Examples of specialised third-party MROs include:
•
Engine overhaul firms such as TAE Aviation Ltd, the latter also providing through-life service
for Honeywell and having FAA-recognised Australian parts manufacturing approval (APMA)
replacement parts approval. Piston engine specialist Bilyara at Bankstown advertises the use
of NDT (non-destructive testing) techniques;25
•
Perth-based Aerospace NDI Ltd, which began by providing NDT services, and expanded into
wheel and brake, undercarriage maintenance and repair and most recently precision tooling
and machining; 26
•
The Hawker Pacific MRO facility, opened at Cairns International Airport in 2005, providing
maintenance and aircraft on ground (AOG)/supply chain management services in Australia,
Asia and the South Pacific, with OEM approval for through-life servicing and repair of a range
of parts and equipment. It has CASA approval for heavy maintenance repair and overhaul of
Boeing 737s and Airbus A320s, as well as line maintenance for wide-bodied A330s. Its
subsidiary Australian Avionics has a large AOG rental/exchange pool and employs on-call
tarmac service staff with electrical and avionics licences. The design engineering department
has CASA Part 21M and Papua New Guinea (PNG) CASA Part 146 Design Organisation
approvals for structural and avionics modifications and flight manual supplements, and
carries out work ranging from avionics upgrades on aging aircraft, to installations and
ongoing support for new first-of-type and customised avionics solutions.27
3.4.2 MRO work performed by OEMs: aerospace manufacturing and aviation industry
linkages
Table 3.11 seeks to quantify the linkages in the conceptual model Figure 3.1. Particularly in the areas
of aviation services and manufacturing, Table 3.11 is likely to represent a significant understatement
of the true extent of the network of organisations in the MRO supply chain. Manufacturing Skills
Australia (MSA) nominate a figure of 1,019 enterprises in this wider network and estimate that they
generate 13,720 jobs and $1.784 billion annually in revenue. These estimates are based on an
assumption that MRO outputs account for 29.8% of the products and services of this network.28
These products and services include the manufacture of aircraft engines, airframes, whole small
aircraft and gliders and guided missiles, as well as the MRO of aircraft, engines and avionics. By
constrast, Table 3.11 was compiled publicly available directories and website verifications. It is
particularly likely to under-represent manufacturers in the supply chain.
The Defence contractors in Table 3.11 are restricted to civilian organisations identified as supplying
aircraft and component MRO services, for example Australian Aerospace (now Airbus) providing
deep maintenance of PC-Orion and Hercules aircraft, or in a range of large to small Defence suppliers
such as BAE Systems, the Hunternet member Communications-Electronic Solutions , and ruggedized
avionics suppliers such as South Australian-based APC Technology.29
Table 3.11 also takes account of the emerging maintenance, repair and overhaul role of OEMs, and
the increasing difficulty of separating the supply chain into a simple model of manufacturing inputs,
manufacture and assembly and afterservice. As well as links into the afterservice market, OEMs rely
25
TAE, 2015; Bilyara, 2015.
26
Aerospace NDI, Pty Ltd , 2015.
27
Australasian Aviation Group, Cairns (AAG-C), 2015.
28
Manufacturing Skills Australia (MSA), 2015a.
29
BAE Systems, 2015a; Communications-Electronic Solutions Ltd, 2015; APC Technology, 2015.
43
on supply chain linkages with engineering manufacturers. Australia attractive to OEMs, both as a
source of suppliers and also, drawing through to afterservice, as ongoing MRO providers and
creators of the parts, components and processes that are inputs into MRO work. For example the
design, precision processing, treatment, and additive manufacturing of materials, electronic
components and integrated systems no longer has an end-point with the production of an aircraft.
Rather, the ongoing diagnostic feedback from operational aircraft and components means that MRO
is increasingly integrated into the production process.
Table 3.11 Organisations undertaking aircraft maintenance and related aviation or aerospace
activities, Australia, 2014 (a selective list)
ACT
NSW
NT
QLD
SA
TAS
VIC
Total
AUST
WA
Aust Main Route RPT/Freight
0
3
0
2
0
0
3
4
8
Airline Operating Offshore (Air Nauru)
0
0
0
1
0
0
0
0
1
Regional RPT
1
2
3
4
2
1
1
2
16
GA Air Operator doing some
maintenance
1
27
8
33
7
31
16
23
116
Defence contractor
5
30
0
7
9
0
14
2
67
Aust independent 3rd Party MRO
2
24
2
26
6
0
15
9
84
GA MRO
0
67
16
79
13
1
53
33
262
OEM
2
7
0
5
3
0
4
0
21
Education/Training (Flight,
Maintenance)
1
13
0
7
2
1
19
4
47
Aviation Services
2
26
5
30
6
0
32
14
115
Aerospace Manufacturer
1
40
2
18
13
2
38
7
122
Professional Services
1
18
0
12
4
0
23
4
66
16
257
36
224
65
8
219
98
923
Total
Sources: AMROBA, 2015; AIU, 2014; Australian Defence Magazine (2014); Australian and New Zealand Defence
Directory, 2014; Aviation WA, 2013; Aviation/Aerospace Australia, 2015; CASA, 2015b; IS-BAH, 2014; SADIG,
2014. This table excludes recreational aviation.
Some examples are worth citing, as indictors of strategic possibilities for integrating Australian MRO
work into OEM supply chains, and as indicators of why Australia is now less subject to the tyranny of
distance and is increasingly being seen as the Asia-Pacific hub for OEMs and Defence contractors.
With the right support from governments and airports, there is now opportunity to embed
maintenance within support for the life cycle of aircraft, and into a process of continuous aerospace
innovation.
The examples begin with the two large aircraft manufacturers. Boeing has established a large
footprint in Australia, and advertises the advantages of the link between its manufacturing and
maintenance subsidiaries here. Following its acquisition of Hawker de Havilland, Boeing
Aerostructures Australia became the sole manufacturer of structural composite components for the
Dreamliner, the B737 and the B777, exporting them back to the USA for assembly. Relatively
unusually for MROs, BACR (Boeing Australia Component Repairs) has direct OEM links, and hence
ties to Boeing Research & Technology-Australia, the Aviall parts network supply and Boeing Defence
44
Australia.30 Similarly in 2014, the OEM Airbus acquired an Australian foothold by taking over
Australian Aerospace, as part of a global consolidation of Eurocopter, EADS and Airbus manufacture
and afterservice. In the process, it has acquired MRO capabilities across civilian and Defence fixed
and rotary wing operations, including in deep maintenance conversions of large aircraft. Three of the
36 type training organisations listed in Table 3.9 are Airbus subsidiaries.
In the small aircraft sector, Pilatus also appears to be positioning itself, not only as a Part 147
training organisation, but as an OEM of the PC-9 turboprop flight training aircraft, working with
Australian advanced manufactures in its production. Lockheed Martin in 2011 signed a Global Supply
Chain Deed with the Australian Government to survey local capabilities for incorporation into its
global supply chain, and has forged links with a range of Australian manufactures and Defence
contractors such as Bristow, which has secured Part 147 type training approval.31 These OEMs would
appear at the very least to be keeping their options open for engagement in significant maintenance
workforce development in the Asia-Pacific region.
Chapter 11 and Appendix 3 provide further examples of firms that appear to see Australia, not as the
end of the line, but as a hub of their Asia-Pacific operations. Thus Table 3.11 provides a reflection of
the changing interface between the manufacturing, operational and service aspects of the aviation
and aerospace industry. Afterservice includes work in the logistics supply chains of parts delivery, as
well as in the sale, leasing, shared ownership and hire of aircraft. It requires varying degrees of
technical knowledge, up to and including the full maintenance and repair qualifications required for
rapid-response AOG (aircraft on ground) services.
On the one hand, as OEMs increase the flow of diagnostic data built into aircraft, the tighter
integration of manufacture and maintenance seems likely, tending to “lock up” knowledge and
maintenance work. On the other hand, this is only part of the story: it has been argued above that
safety assurance and workforce development and mobility depend on the countervailing presence of
strong MRO capability in the airline and independent MRO sectors, and on a publicly accessible
maintenance training industry that is not tied to specific OEMs, but is able to serve all aviation
sectors, including GA, within Australia and the Asia-Pacific region.
The final grouping in Table 3.11 the are 66 organisations and individuals providing professional
services, such as auditors, manual writers and authorised approvers of design modifications under
CASR S 21M. In terms of professional services, however, it is instructive to return to the statistics in
Table 3.9 and to identify the extent to which it is OEMs, rather than airlines, who are setting
themselves up to invest in maintenance training. National investment in strategically focused
aeroskills training is more than ever needed to prove a matrix for the type training that is now on
offer.
3.4.3 Perspectives of MRO managers, particularly in the GA sector
As 262 of the 345 independent MROs identified in Tables 3.9 to 3.11 were in the GA sector which is
the backbone of regional and rural working aviation, it is important to have an understanding of
their business. We surveyed MRO owners and managers in 2013 and received 73 responses, mainly
from the GA sector, with 30% providing services to charter operators. 66% engaged in component
MRO and 11% in tied contracts with OEMs to service aircraft or components. Several firms carried
out both these functions and a range of other servicing types. Of those who identified as specialists,
the main service specialisations were: structure/airframe (68%), engines (59%), mechanical
components (47%) and instrumentation 24%. The main components serviced or supplied were
engines (32%) and avionics (23%). 67% of respondents were working on fixed wing aircraft, with
30
Boeing Australia Component Repairs, 2015.
31
Lockheed Martin Australia, 2015.
45
Cessna (71%) and Piper (42%) being the main types serviced. Just on 48% of firms serviced their local
region, with 24% servicing their own or an adjacent state and 23% servicing national customers. The
profile of these firms’ workforce indicates that 62% of them had between one and nine employees
or contractors, 19% were sole traders, 9% employed between 10 and 29 people and just over 10%
had 30 or more employees or contractors.
This 2013 survey of MROs revealed a mixed picture in terms of performance and expectations. The
majority of respondents appeared to be more optimistic than pessimistic about their future trading
performance. Compared against the last five years, 45% believed that business turnover in the next
five years would be higher (6% much higher), just under 29% the same, and 21% that it would be
lower (6% much lower). This extended to their assessment of their business’s viability, with 33%
expressing themselves reasonably confident that it would be viable in five years’ time, 17% very
confident, 21% not very confident, and 17% not at all confident. The majority of the firms surveyed
(41%) had remained much the same size in workforce numbers over the past four years. However,
16% were much smaller, 15% were a little smaller, 21% a little larger and 6% much larger. On
balance it appears the surveyed sector had contracted slightly over the period.32
3.5 The MRO workforce
3.5.1 Numbers and capabilities
The 2011 Census (the latest accurate data) shows a total of 8,795 persons employed in the Aircraft
Maintenance and Repair (Australian and New Zealand Standard Industry Classification (ANZSIC)
2394) industry class. However, this does not include aircraft maintenance workers who gave their
industry as Air and Space Transport, who accounted for 36.31% of the 14,489 employed persons
giving their occupation as Aircraft Maintenance Engineer (Australian and New Zealand Standard
Classification of Occupations (ANZSCO) 3231), as opposed to 4,157 (33%) in aircraft maintenance
and repair. A further 3,861 (30.7%) of persons working in that occupation gave their industry of
employment as Defence, apparently indicating that they were employed in a Defence establishment,
though not necessarily as serving Defence personnel. All indications suggest that this total has fallen
significantly over the intervening period, with various official estimates putting the annual attrition
at anywhere between 2.5% and 16%. These estimates are discussed in more detail in Chapter 9,
where an attempt will be made to update them to the start of 2015.
The AME workforce is overwhelmingly qualified at the trades or technician level, and hence would
presumably qualify as “technicians” in the FAA/CAVOK classification. The great majority of
respondents in 2011 who gave their occupation as AME held qualifications at the Certificate level.
51.8% had a Certificate III as their highest level of qualification, and a further 15.3% were qualified to
Certificate IV, at that stage the minimum level at which new recruits were expected to be qualified
before they were able to study for a licence. Diploma, advanced diploma or associate degree
qualifications, which correspond broadly to the current minimum requirement for grant of a B
licence, were held by a further 12.2%. At the ends of the distribution, 5% held a bachelor’s degree
and a further 1.6% some kind of postgraduate qualification, while 11% reported holding no post-
32
We are cautious about extrapolating too strongly from these results, since the achieved sample was quite
small (73 out of a sample frame that began with 700 but was reduced by elimination of apparently 400). The
actual response rate may have been closer to 20%, as 50 of the forms sent out were returned to sender, the
most likely explanation being that the businesses in question had ceased trading. While such a response rate is
acceptable in principle for a business survey of this kind, we cannot be certain that the achieved sample was
representative.
46
school qualifications.33 Perhaps surprisingly, the share of respondents in the occupation who held
certificate or diploma-level qualifications fell marginally between 2006 and 2011, a drop that was
offset by a rise in the proportion who were university-qualified.34
3.5.2 Career mobility and skill transfer within and across aviation and aerospace sectors
Mobility of individual workers within and across the aviation and aerospace sectors identified above
could help retain the widest possible pool of skilled workers, minimising skill wastage; and provide a
buffering amidst industry restructuring. It could potentially contribute to a deepening of technical
and process management skills, based on contextual understanding of the industry, resulting in
innovation through cross-fertilisation of techniques and ideas.
The question of aircraft maintenance career paths was explored in 2012, when the project team
surveyed a convenience sample of aircraft maintenance engineers (AMEs) and licensed aircraft
maintenance engineers (LAMEs)35 and received 708 responses, of which 697 contained usable
answers to career path questions. The responses revealed some internal career paths, as well as
ease of re-entering main MRO occupations after time out, and a degree of mobility across the areas
identified above. Some skill wastage was also indicated, with scope for greater alignment between
aeroskills and manufacturing skills.
Table 3.12 provides a broad indicator of individuals’ movements along internal and external career
paths within aviation/aerospace, by comparing their first job with their most recent job. For almost
all of the respondents there was some form of career progression within aviation. The majority of
respondents, 96%, reported starting their aviation careers as LAMEs, AMEs or apprentices with over
half, 61%, progressing to become licensed aircraft maintenance engineers. A further 17% of
respondents had progressed into roles in management, as professionals, in operations management
or as supervisors.
In contrast only 20% of respondents either remained un-licensed or had let their licenses lapse and
less than 2% of respondents moved from management, professional, operations management or
supervisory roles to either LAME or AME.
33
These are likely to include many older licensees who were able to progress through to the grant of a licence
and subsequent permissions through self-directed learning and experience, at a time when there were few or
no specialist training courses for AMEs. Annex 1 to the Chicago Convention, which sets the requirements to
qualify for a licence, still provides a legitimate pathway in which the necessary skills are learnt on the job,
though the current Australian licensing scheme no longer allows this. (See chapter 8.)
34
While the Census did not include questions on this matter, it seems probable that many of these would be
migrants who got their initial training in countries where the standard preparation for an AME takes the form
of a bachelor’s degree.
35
The sampling frame was compiled through the recruitment of volunteers by two project Partner
Organisations. Thanks to all involved.
47
Table 3.12 Career pathways – Australian maintenance engineers surveyed 2012
Total valid
Aviation
Manager
Professional*
Operations
Manager
Supervisor
LAME
AME
Apprentice
First job in aviation
Aviation other
Most recent job in aviation
Apprentice
0
0
16
106
19
14
15
10
180
Aviation other
0
0
2
2
1
0
0
0
5
AME
1
1
120
128
9
5
12
9
285
LAME
0
0
4
157
1
2
7
5
175
Supervisor
0
0
1
3
6
0
0
0
10
Operations
Manager
0
0
0
0
0
2
0
0
2
Professional
0
0
1
2
0
0
1
3
7
Aviation Manager
0
0
0
2
0
0
1
1
4
Total valid
1
2
144
399
36
23
36
28
669
Source: Survey conducted as part of Linkage Project LP110100335. Total responses: 708. Responses usable for
this question: 669
*Professional – any occupation so defined in ANZSCO (ABS, 2006b), eg teacher, engineer, auditor
Table 3.13 shows respondents’ mobility between sectors of the aviation industry by comparing the
sector of their first aviation employment to that of their most recent. One third of respondents, 33%,
both started and finished their career with Qantas with an additional 20% beginning and ending
their careers in airlines. Overall, 61% of respondents had started their aviation careers with airlines,
37% with Qantas. At the time of the survey in 2012, 73% of respondents were working for airlines,
with over 60% working for Qantas.
Over 18% of respondents had started their aviation careers in Defence, with all but one respondent
having moved into civilian aviation. While 28 respondents had started in aviation working for an
OEM or OEM distributor/afterservice provider, only two had remained in that role, most moving to
employment with Qantas. Movement into and out of GA/helicopter appeared relatively fluid. About
11% of respondents had started their careers in the sector with 10% being employed in the sector in
2012. About one third of respondents working in GA/Helicopter had both started and continued to
work in the sector, a third had started in GA and ended up at Qantas, with another 13% each moving
to other airlines or independent MROs.
Table 3.13 reflects impacts of the expansion in stand-alone MROs. While fewer than 3% of
respondents had started their aviation careers in the independent MRO sector, nearly 9% were
working for independent MROs in 2012. They had come mainly from other Australian main route
airline operators (20%), GA/ helicopter operators (32%), or a defence facility (32%).
In terms of occupational mobility into and out of aviation, the survey responses provided mixed
evidence. Qualifications allowed a return to the occupation/industry, and some movement into
other technician/trade areas, but there was also some evidence of skill wastage. Only half of the 161
respondents (23%) who stated that they had left aviation at some point in their career had actually
made a clean break to another role. Of the 85 respondents who recorded their work history outside
of aviation only six had not returned to aviation.
Most of those who had left (86%) had been employed as apprentices, AMEs or LAMEs prior to
leaving. Of these, 51% had been able to redeploy their skills as technicians and trades workers while
48
8% worked as machinery operators and drivers, 16% went into labouring jobs and 8% went into
community and personal service, and 8% into sales. Very few had found work as managers or
professionals outside aviation. In terms of the main industries in which aviation leavers found work,
one third moved into manufacturing (transport equipment manufacturing such as boat
manufacturing or fabricated metal product manufacturing). Another third went into construction,
transport, postal and warehousing, and retail trade, and 7% into the category “other maintenance
service” (eg automotive, machinery and equipment repair and maintenance).
The main reasons given for leaving aviation included retrenchment (45%), better work opportunities
elsewhere (44%), and dissatisfaction with conditions (42%). Over three-quarters found their
qualifications and experience “of some use” in gaining and carrying out their new job, although the
number finding these “very useful” was lower, at around one-third. It is notable that 47% of all
industry leavers returned to work with airlines. Qantas had the highest attrition rate, with 14% of
those leaving aviation coming from Qantas, but also employed the largest share of those returning
to aviation (26% of all industry leavers). Both Qantas and the airlines overall employed more leavers
than they lost, 26% of those who left employment with airlines returned to work with airlines, and
7% left work with Qantas only to return to Qantas. High attrition rates were also reported for
Defence facilities (21%) and GA/ helicopter (14%), while sectors accepting returners included
Independent MROs (17%) and GA/ helicopter (11%). These figures suggest a need to explore
effective workforce management strategies in the face of aviation industry volatility.36
36
Sarina and Wright, 2015.
49
0
0
Education/ training/ research
Self employed/ contractor
Airline operator Australian
main route
45
0
1
0
0
6
1
0
4
4
3
20
6
33
0
0
2
0
7
2
1
6
3
7
2
3
9
0
0
0
0
1
0
0
1
2
1
0
4
1
0
0
0
0
0
0
0
0
0
0
0
1
65
0
0
3
1
21
1
0
21
6
3
5
4
59
0
0
3
0
14
3
9
10
1
3
13
3
2
0
0
0
0
1
0
0
0
1
0
0
0
Defence facility
OEM/ distributor
Independent MRO
GA/ helicopter
Freight
Airline operator - regional
1
0
0
0
0
1
0
0
0
0
0
0
0
11
0
0
0
1
4
0
1
3
1
0
0
1
50
0
0
2
1
7
1
1
6
0
0
1
4
23
Sector of employment – Most recent job in aviation
Defence contractor /
Supplier
Source: Survey conducted as part of Linkage Project LP110100335. Total responses: 708. Responses usable for this question: 673
404
2
Government/ non profit
Total valid
6
50
Defence facility
Defence contractor/ supplier
15
23
GA/ helicopter
OEM/ distributor
22
Airline operator - foreign
7
26
Airline operator - regional
Independent MRO
33
220
Qantas
Airline operator - Australian
main route other
Qantas
Sector of employment - first
job in aviation
Table 3.13 Sectoral mobility – Australian maintenance engineers surveyed 2012
Government/ non profit
Education / Training/
research
7
0
0
0
0
3
2
0
0
0
0
1
1
7
1
0
0
0
3
1
0
1
1
0
0
0
7
0
0
0
0
1
2
0
0
0
1
0
3
673
1
1
12
9
119
28
19
75
41
44
75
250
Total valid
Not employed in aviation
Self Employed / contractor
3.6 Conclusion
This chapter has produced an overview of the Australian aircraft maintenance sector, and of
its changing place within the Australian aviation and aerospace industries. As Figure 3.5
illustrates, MRO work is located both within the aerospace industry and the aviation
industry, and is also, via the role of OEMs and contractors, spanning the Defence/civilian
divide. Logistics work —particularly the ferrying of parts accompanied by mobile
maintenance engineers — embodies the dividing line between aerospace and aviation.
Increasingly, maintenance, repair and overhaul work may be performed in a range of ways:
•
In house by international, domestic, regional and charter air operators;
•
In dependent or independent contractor arrangements, including in the GA sector
by MROs carrying out charter or aerial work;
•
In stand-alone specialist or generalist MROs;
•
By OEMs or their agents or Tier 1 suppliers, either on an independent contract basis
or under through-life service arrangements.
Figure 3.5 Emerging industry locations of MRO work
Figure 3.5 seeks to represent the importance of education and training in the emerging MRO
industry. It suggests:
•
The importance of harmonising civilian and Defence Approved Maintenance
Organisation recognition processes, as well as licensing procedures and
requirements, because of increasing reliance on a common aircraft platform ,
because of the role of OEMs and contractors in providing MRO services and training
to Defence arms, and to enhance workforce mobility;
•
The need for a stronger articulation between manufacturing and maintenance
training, and for ensuring access to relevant training for employees of stand-alone
MROs as well as maintenance staff employed by airlines or working in Defence
industries;
•
The potential for bringing together flight and crew training and maintenance
training as an education export industry;
•
The need to keep a strong category training presence in the public vocational
education sector.
51
Appendix 3 provides illustrations, from a range of Australian states and regions, of different
aviation/aerospace clusters, suggesting how MROs could be part of hubs of innovation and
regional development.
In debates about the future of aircraft maintenance in Australia, there has been a sense of
pessimism resulting from the highly visible offshoring of maintenance of the newest aircraft,
particularly the A380, as well as closure of the Tullamarine and Avalon facilities, which were
devoted to the leftovers of the 747 fleet. In this restructuring Australia’s only large RPT third
party MRO was a casualty, accompanied by increased offshoring of B737s to New Zealand.
Yet this impression could be misleading, as the overview of the industry produced in this
chapter indicates. While the main airline has chosen to offshore A380 maintenance, the
necessary capacity to onshore it remain in the Brisbane facility, where large twin aisle
aircraft (in particularly the A330) are being refurbished competitively. Despite intensified
offshoring, the bulk of single-aisle domestic carriers are maintained in Australia, along with
the small plane RPT and irregular PT aircraft. This work exists alongside, and indeed
networked to, a diverse sector composed of stand along MROs, component manufacturers
and other organisational forms linked into component supply chains. One conclusion of this
review of the industry is that the finding that the trend to offshoring is somewhat
exaggerated in extent, although this point needs to be carefully put because simply counting
numbers of maintenance checks offshored can understate the latter’s importance in terms
of employment losses.
The chapter sought to draw some indicators of future maintenance demand by inspecting
the CASA register, as well as the extent of airplane use and age. Here, again, the picture that
results is not exactly what might be expected from the assumptions built into the regulatory
framework in which it is embedded. First, there are a large number of small planes, of
similar characteristics, that are well encompassed within the former CAR 30 “group” system
(see Chapter 8). The bulk of these are very old – 37% more than 40 years, and 40% between
21 and 40 years. These are well suited to “group” regulation and licensing. Yet the dividing
line of 5,700 kg MTOW is based on assumptions that equate plane size with complexity that
no longer necessarily hold. Some small planes (and an unknown number which feature
retrofitted systems, eg avionics) are technically complex, and 12% of the 10,212 fixed wing
small planes on the CASA register are less than 10 years old, with 43% of rotary aircraft the
same age. There is also a section of aircraft below the former CAR30 8,000 kg MTOW
dividing line that have been “caught” by the recent shift in the new CASRs to the 5,700 kg
MTOW division, the licensing arrangements for which now require type ratings, and type
training. Almost all of these aircraft are maintained in Australia – indicating again the need
for the sector to be managed, and for national solutions to be put forward for training.
Later chapters will argue that a global shortage of aircraft maintenance capacity is both a
threat to Australian aviation and an opportunity for building capability, self-reliance and
national safety and security, and to move into the export of high quality MRO work, linked
to an innovative aerospace manufacturing industry and potentially, the addition of
maintenance training to our educational export portfolio. The Australian aircraft MRO
industry, across civilian and Defence aviation and across existing and emerging aviation
sectors can build a greater degree of national self-reliance, through cooperation among
regulatory agencies, major airlines, manufacturers and independent MROs. Through closer
integration with existing advanced manufacturing networks, it can also supply specialised
Asia-Pacific MRO and maintenance training markets.
52
53
Chapter 4 Safety Issues 1: The Dimensions of the
Problem
4.1 Introduction
One of the major research questions addressed by this study was the extent to which
offshore maintenance was compromising the safety of Australian aviation. This chapter and
the following one set a context for the more specific discussion of those risks in chapter 6,
first by establishing whether significant safety risks still exist to the safety of passengers and
aircrew despite the improvements in headline statistics on safety over the last two decades,
and subsequently by using qualitative evidence and models drawn from safety science to
establish where the significant risks are most likely to be found.
Within the industry and among the travelling public it serves, perceptions of aviation safety
are complicated by a paradox which does not exist for most other areas of human activity.
Statistically, main-route passenger aviation today is by far the safest of all modes of travel,
as airlines and regulators keep reminding us. Intrinsically, though, flying is a dangerous
activity. That several thousand kilograms of metal or composites, together with 300 or more
human beings, can be kept continuously aloft for twelve hours or more some 13,000 metres
above the earth, at speeds approaching the sound barrier, often seems hard to comprehend
when we stop and think about it. A great many things need to go right, and if enough of
them go wrong, the consequences can be immediate and devastating. Two or three times in
a typical year, a major crash occurs close enough to home to remind us all starkly of that
fact.
A legal adviser to the US Aeronautical Repair Stations Association (ARSA) put this paradox
eloquently in response to the GermanWings tragedy:
… a simple truth is clear: to board an aircraft is an act of incredible trust.
More than any other time in our daily lives, crossing a jetway means
entering a world of unavoidable dependence on others.
Taking flight truly is an act of faith: faith in physics and Bernoulli’s principle,
faith in clear skies and tail winds, faith in the countless people – from the
maintenance line to the control tower to the cockpit – that will bring you
safely back to earth.
For the maintenance community, shared responsibility is embodied in half
of a million men and women worldwide. Far too often their collective
effort goes overlooked; most travelers think only of maintenance when the
word is followed by “delay.” The truth is you can’t fly without it.1
Risk is a combination of the likelihood that something will go wrong, and the consequences
if it does. Where the one is very low and the other very high, it can be difficult for the public
at large to reach a consistent perception of the level of risk. On the one hand most of us
today, when we get on a flight, will have worries on our mind – will we miss our connection,
will we get any sleep before tomorrow’s meeting, will our luggage be lost along the way –
but they generally do not include worrying whether we will make it to the other end in one
piece. Conversely, when there has been a cluster (however random) of fatal accidents
1
Levanto, 2015
53
involving many citizens of industrialised nations, passengers tend to be much more
conscious of risk than the statistical probability warrants. Public risk-aversion therefore
fluctuates cyclically and unpredictably, making it difficult to arrive at a long-term safety
strategy which consistently meets user expectations.
Australia in 2015 found itself at the high point of one of these cycles of concern. The last
twelve months had been an annus horribilis for aircraft-related deaths. The first seven
months of 2014 saw two highly public disasters which took a total of 537 lives, more than
the entire average world total of fatalities for each of the preceding five years and well over
twice the world total for 2013. Though one of these was clearly not the result of an accident
in the sense we use the word here,2 it was this one (MH17) which probably made the
greatest impression on Australians, because so many Australian lives were lost. Within the
same month as MH17, two further crashes, one over Mali and one over Taiwan, took
another 160 lives, and the December AirAsia crash over the Java Sea took 162 more,
followed in February this year by a further well-publicised one in Taiwan (26 dead), and in
March by the catastrophic destruction of GermanWings 4U9525 (also not an accident by the
official definition) taking another 162.
Yet through all this, air travel on international and inter-capital routes in 2014 was the safest
it had ever been. Not counting those from MH317, 641 lives were lost over the full year,
three times the number for the previous year and more than a hundred above the five-year
average, but lower than in 2009 and 2010. However, the number of fatal accidents was
down to 12, from 19 in the previous year, and the number of fatalities per million flights was
the lowest ever recorded. In the two decades since 1994, fatal accidents per million
departures had fallen by two thirds, and accidents involving loss of the aircraft had halved.3
Australia has had no fatal accident in high-capacity scheduled passenger transport since
1975,4 and no fatality resulting from an actual crash in the whole 55 years since jet aircraft
were first introduced.
As the ARSA representative went on to say, “Flying is the safest it’s ever been, but clear
statistics will always give way to grief.” The disconnect between statistical risk and potential
risk – the paradox that flying can be at once so safe, and so dangerous – is more than just
emotional. On the intellectual level too, there is no logical map for making the leap from one
to the other. This matters because it is a trade-off that has to be made every day by airline
management: whether to err on the side of stricter safety precautions, which inevitably
raise operating costs, or to rely on the statistical evidence and assume that the risk is too
small to warrant the precaution. An operations manager could be forgiven for concluding
that since her airline has completed five million flights without an accident, it has no reason
to worry about accidents. But as Drees at al. point out in their work for IATA,5 that evidence
does not make it any more certain that it will complete the next five million without an
accident.
2
The loss of the MH370 was classified by the Malaysian authorities as an accident, and hence it was
treated as such in the IATA and ICAO statistics.
3
International Air Transport Association (IATA), 2014. Note that this figure covers full-sized passenger
and cargo aircraft in revenue service, and consequently includes fewer fatal accidents than the series
analysed below.
4
This accident involved collapse of the nosewheel gear on a Boeing 707 during pushback, which
crushed and killed the driver of the tractor. See Australian Transport Safety Bureau (ATSB), 2013, p.
14.
5
International Air Transport Association (IATA), 2014, p.81.
54
Chapter 4 - Safety Issues 1: Dimensions of the Problem
In industries where the risks are more visible and miscarry more often, it is possible for
safety managers to develop statistically based risk management models which provide some
guideline as to where the balance should be struck. But in an environment where very few
serious accidents happen, evidence can be not only hard to find, but where it exists, too
sparse to permit the kind of statistical inference on which such models are based.
This dilemma is addressed by discussing the two dimensions of safety in different chapters.
This chapter looks at the available statistical evidence on trends in accident rates, and the
specific issue of how far maintenance errors and omissions are associated with accidents.
The next looks at the kinds of risks that affect aviation, and the particular ones which are
important today, and which have been identified by independent expert assessments.
4.2 What the statistics tell us: Accident numbers
We begin by using some very basic probability theory to address the question raised two
paragraphs back: how long does a safe record need to be before one can reasonably assume
that everything will be safe from now on? To get a statistical perspective on this issue, we
resorted to the longest run of data on accidents that was readily available. This dataset
comes from the Aviation Safety Network, a subsidiary of the private Flight Safety
Foundation, and runs back almost three quarters of a century, to 1942. Because it covers all
airliners with 14 or more seats, excluding military and corporate aircraft, it embraces a
section of the world fleet which is much larger than that covered by the ICAO or IATA
statistics, and arguably includes planes which are more crash-prone than those of the mainroute passenger fleet because of their size, age, operating conditions or all three. While this
characteristic makes it more difficult to compare these statistics with other sets which
provide more detailed information, it has at least the advantage of providing us with a larger
“population” from which to draw statistical inferences.6
Figure 4.1 below tracks the number of fatal accidents, and the number of resulting deaths,
over a 60-year period to 2014. In reality, it uses data points going back another 10 years,
since the broken line shows the average number of fatal crashes in the 10-year period up to
each year for which the actual total of accidents or casualties is shown. Consequently it
looks right back to the end of World War II, which is as far back as the records can usefully
be analysed, given how little civil aviation took place during the war. While the number of
accidents actually occurring fluctuates considerably from year to year throughout the
period, the 10-year rolling average (the broken line) shows a fairly clear trend, rising steadily
up to around 1980 as might be expected given the growth in the total number of flights in
each year, but tailing off from then on, despite the continuing and in fact rapidly increasing
growth in activity.
Remembering that we are looking here at the number of accidents rather than the rate of
accidents (which is discussed later in this chapter), the variation over time is much smaller
than might intuitively be expected. It rises again in the 90s, but then shows a strong and
steady decline up to the present. In most years from 1996 onwards, the graph of actual
crashes lies below the 10-year trendline, indicating that the number of crashes is going
down faster than one would expect from experience over the past decade.
6
It also covers only hull loss accidents, i.e. those which result in the aircraft being destroyed or at any
rate written off. This criterion excludes a certain number of fatalities which occur in accidents
resulting in damage to the aircraft which can subsequently be repaired, but the number of excluded
cases is arguably small enough to be ignored for these purposes.
55
Fatal hull-loss accidents, airlines over 14 seats (excluding military and
corporate), world, 60 years to 2014
90
80
70
60
50
40
30
20
10
1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Accidents
10-yr rolling average
Mean+2SD
Mean -2SD
Source: Aviation Safety Network, 2015
Casualties from hull-loss accidents, airliners with 14+ seats (excluding
military and corporate), 20 years to 2014
3000
2500
2000
1500
1000
500
0
195519571959196119631965196719691971197319751977197919811983198519871989199119931995199719992001200320052007200920112013
Fatalities
10-yr rolling average
Mean+2SD
Mean -2SD
Source: Aviation Safety Network, 2015
Figure 4.1 Fatal aviation accidents (over 60 years) and number of fatalities (over 20 years)
to 2014
From a run of data this long, it is possible to calculate the probability of an accident
occurring in the present year using a measurement called the standard deviation, which
measures how far a set of observations varies from the average reading. One of the most
basic postulates of statistical probability is that in any normally distributed population, 95%
of observations will lie within two standard deviations either side of the mean. This range is
called the 95% confidence interval. The two dotted lines on each graph in the two Figures
4.1 show the upper and lower bounds of this confidence interval in each year.
Looking at the first graph in particular, it can be seen that two things are changing over time:
the average number of accidents in a year, and the extent to which the actual number in any
given year can be expected to differ from the trend figure. Over the last decade in particular,
it is clear that the range of expected variation is getting narrower, indicating that predictions
are growing steadily more reliable, and surprises – pleasant or unpleasant – less likely. This
is what might be expected if the measures adopted across the world to prevent fatal
accidents are growing more dependable.
Based on the confidence intervals for 2014, there is only a 5% chance that the number of
accidents across the world in 2015 will be higher (in rough figures) than 40 or lower than 18,
or that the number of deaths in aircraft accidents will be higher than 1200 or lower than
56
180. This calculation is obviously not of great practical use, and in any case it refers only to
the statistical likelihood, without taking into account any of the many other factors which
could result in a figure higher or lower than these theoretical limits. Nevertheless, it
illustrates that a substantial risk does still exist in spite of all the improvements: it is
foreseeable that there could be 40 fatal accidents across the world next year, taking a total
of 1200 lives, simply through the normal amount of chance variation from year to year.
Equally, there could be even fewer accidents than last year, and less than a third as many
lives lost this year than last, but this would still not demonstrate (in terms of statistical
probability at least) that all the hazards were on their way to being definitively controlled.
Two important practical implications emerge from this somewhat technical analysis. First,
even if the current declining trend in fatal accidents continues, there is still a possibility that
as many as 1200 lives could be lost in crashes this year – still very few by comparison with
those lost on the roads of the world every month, but enough to be recognised by all parties
as a serious risk. Second, a major change up or down from the trend figures in any one year
is not evidence in itself either that the underlying problem is growing, or that it is being
more effectively addressed. This is arguably the most critical implication for safety policy,
since it implies that if any of the underlying factors should deteriorate markedly, their
impact is likely to be masked for some years because it falls within the normal range of
chance variation.
4.3 What the statistics tell us: Accident rates
Obviously, the figures just discussed tell only a small part of the story (even if it is the one
that matters most to the public at large), because they take no account of the rapid growth
over the last five decades in the number of passenger planes in the air at any given time, and
the number of flights made in each year. When we turn to the accident rate, generally
expressed in terms of fatal accidents or fatalities per million departures 7 (PMD), the
progress looks a great deal more spectacular. For the purposes of this discussion, it is
possible to move beyond just fatal accidents and look at data for accidents in general, which
are not available in the ASN series.
Looking at this statistic for the larger jets used in main-route carriage, the period of really
spectacular reductions appears to be over. The EASA 2013 safety report showed that the
world fatal accident rate per 10 million departures halved from just over 40 to 20 in the
decade to 1994, but fell by only half that amount in the following decade.8 Statistics
produced by Boeing for the world commercial jet fleet show that the total accident rate
dived by around 90% in the single decade from 1960 to 1970, and the rate of fatal accidents
by almost the same amount between 1959 and 1974.9 Even this drop seems insignificant
compared with statistics for the US (the only country in which the figures have been large
7
Where commercial passenger aviation is concerned, it is preferable to use a measure based on the
number of individual flights, as opposed to distance covered or time in the air, because the number of
departures has been shown empirically to be much more tightly associated with the probability of an
accident occurring. This reflects the evidence that most accidents in commercial aviation occur on
takeoff, approach and landing, as against only 18% at cruise altitude (Boeing, 2015). In the case of GA,
however, a distance-related measure makes more sense because the cruise segment of each flight is
generally more hazardous than for large planes, and such a measure is generally quoted in addition to
the departures-based accident rate.
8
EASA, 2014, p.14. Three-year moving average, all scheduled passenger and cargo flights.
9
Boeing Commercial Airplanes, 2015.
57
enough to support statistical inference for that long) which show that the number of fatal
accidents per million aircraft-miles in main-route passenger aviation shrank by a factor of
1000 in the 70 years to 2001.10 By contrast, the Boeing statistics cited above show that the
overall accident rate has remained remarkably stable since the mid-70s, and even the fatal
accident rate hovered around the same, admittedly very low, level from the early 90s
through to around 2009.
As is generally the case in aviation, comparative statistics need to be approached with some
caution because no two sets cover precisely the same segment of the fleet, and some are
restricted to particular categories of accident. Despite this, different sources show
remarkable consensus in describing a virtually flat trend in the accident rate over the last
decade or more. Figure 4.2 compares the overall accident trends recorded by the IATA
statistics and those by the Australian Transport Safety Bureau for high-capacity regular
passenger transport (RPT), i.e. aircraft with more than 38 seats operating on scheduled
services, which come closest to capturing the same segment of the fleet. The Australian data
show much more variation from year to year, as would be expected from the much smaller
“population” involved, including several years in which no accidents were recorded. Despite
this, the trendlines remain remarkably close, and the very gradual convergence should
probably be disregarded.
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2004
2005
2006
ATSB high-cap RPT
2007
2008
IATA
2009
Linear (ATSB high-cap RPT)
2010
2011
Linear (IATA)
Sources: Australian Transport Safety Bureau, 2013; International Air Transport Association, 2014
Figure 4.2 Aviation accidents per million departures — Australia and worldwide, 2004-12
Broadly speaking, all sources indicate that the overall rate of accidents has hovered fairly
consistently in the 3-4 PMD bracket for at least the last decade, and Boeing’s graphs (for
which the raw numbers were not available) suggest that this trend goes back at least to the
80s, at any rate for that segment of the world fleet in which Boeing’s products compete. The
accident data released by Airbus are not directly comparable because they cover only fatal
and hull loss accidents, which are obviously much less common than accidents in general,
and hence likely to show a larger chance variation. Despite this, they do show a reasonably
flat trend from around 2004 onwards for fatal accidents, and between 2003 and 2010 for
hull losses.11 A study conducted by the UK Civil Aviation Authority in 2013 identified a
declining rate for fatal accidents in the decade to 2011, but a breakdown of its findings
10
Thomas and Forbes Smith, 2004, p. 96.
11
Airbus, 2014.
58
2012
suggests that this was largely due to a significant decrease in the incidence of fatal accidents
in Africa and the Central America/Caribbean area.12
The UK CAA study just mentioned quantifies the risk in a more graphic way by showing that
an average passenger would need to take 3.1 million flights (one every day for 8,505 years)
before being killed in an accident. For jet aircraft the number increases to 5 million flights, or
13,573 years, though this decreases sharply for anyone flying with an African operator, who
would need to take only half a million flights. The figure for operators over the whole of
Oceania is slightly above the world average at 5.3 million flights.13 However, these statistics
are slightly counterbalanced by the finding that in each of the 250 fatal accidents analysed,
an average of 70% of those on board were killed.14
From this we can conclude with reasonable confidence that the most important advances in
passenger and aircrew safety have already been made several decades ago, and that
accident rates in Australia as well as globally have effectively stabilised for some time. But
while the primary interest in this chapter lies in accidents, it is important to note that the
number of incidents reported to the ATSB grew by 90% for commercial aviation in general,
and more than doubled for high-capacity RPT, in the decade to 2013. The ATSB points out
that this growth is partly an artefact of different reporting requirements, and partly related
to the overall growth in traffic. However, the growth of 135% over the decade for incidents
reported in high-capacity RPT is just over twice the growth in the number of departures,
suggesting that at least some of the increase must be real.15
We are talking here, of course, about only a small proportion of the world fleet. The
situation changes markedly when we shift our attention to charter and general aviation
(GA). While reliable world figures are difficult to find for these less sectors of aviation, the
Australian statistics indicate a very different world where safety is concerned.
Figure 4.3 below compares the accident rates for commercial and general aviation over the
decade to 2011. The trend rate for GA was around three times that for commercial aviation
at the start of the period, and by 2011 the gap had widened to a factor of approximately
four. It will be seen that even the rate for commercial aviation is higher than those shown by
the previous two graphs, because it includes charter, for which the rate is generally 3-4
times as high as for scheduled services. In fact, the decline shown by commercial aviation
largely reflects a decrease in charter flying over the period; this is illustrated by the third
curve, for high-capacity RPT, which actually shows a marginal rise over this specific period.
12
Civil Aviation Authority – UK (CAA), 2013, Fig. 23, p. 33.
13
ibid., Table 7, p. 34.
14
ibid., p. 1.
15
Australian Transport Safety Bureau (ATSB), 2013, p.14.
59
80
70
60
50
40
30
20
10
0
2002
2003
2004
2005
2006
2007
2008
2009
High-cap RPT
Commercial air transport
GA
Linear (High-cap RPT)
Linear (Commercial air transport)
Linear (GA)
2010
2011
Source: Australian Transport Safety Bureau, 2013
Figure 4.3 Aviation accidents per million departures by sector, 2002 - 2011
An even clearer indication of the contrast appears when we add to actual accidents the
statistics for near misses (in standard ICAO terminology, “serious incidents”), where in the
opinion of the expert accident investigators, “circumstances indicate that an accident nearly
occurred”, and change the denominator from departures to hours flown. Although Figure
4.4 below covers a shorter period than Figure 4.3, it shows a much steeper growth trend for
serious occurrences (accidents plus near misses) in GA, ending the period over 13 times as
high as for the whole of commercial air transport (including charter).
,
200.0
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
2003
2004
2005
2006
2007
2008
2009
GA
2010
2011
Linear (GA)
Figure 4.4 Accidents and near misses by aviation sector, 2003 - 2011
The contrast here is admittedly exaggerated by the fact that the GA figures include many
helicopters, for which the accident rate is higher, and the fatal accident rate considerably
60
higher, than for fixed-wing aircraft.16 This is especially the case in the two most dangerous
sub-segments, agricultural and private and business flying.
Where fatal accidents are concerned, the pattern is broadly similar, though once again with
greater fluctuations because fatalities are less common across the board. Both fatal
accidents and fatal accidents per million departures (Figure 4.5) show a clearly rising trend
for GA and a falling one for commercial aviation (partly, once again, because the more
dangerous categories of charter and low-capacity RPT are less strongly represented over
time). Where the raw number of fatalities is concerned (graph not shown), the trend is
essentially flat for GA, while for commercial aviation the trend figure fell from ten to less
than two.
12
10
8
6
4
2
0
2001
2002
GA
2003
2004
2005
2006
2007
Linear (GA)
2008
2009
2010
2011
Figure 4.5 Fatal accidents per million departures, general and commercial aviation, 20012011
By way of comparison, the latest US statistics prepared by the private Aviation Safety
Institute (an offshoot of the Aircraft Owners and Pilots Association) show a declining trend in
the overall number of GA accidents in the ten years to 2014.17 The trend was most
pronounced in non-commercial GA, and more consistent for fixed wing aircraft than for
helicopters. For non-commercial fixed wing aircraft, the 2013 accident rates (overall and
fatal) were the lowest in the 25 years covered by these statistics, and the fatal accident rate
fell below one in every 100,000 hours flown for the first time. In the case of helicopters,
non-commercial operations showed a slight downward trend over the decade while the rate
for commercial operations rose fairly sharply in the two years to 2013. The statistics suggest
that the rising rate in Australia may not necessarily reflect a global trend, and that there may
be factors specific to Australian GA which are causing the accident rate to rise here.
On all of these measures, it is painfully clear that public awareness of aviation safety has
tended to focus on the least risk-exposed part of the aviation industry. So while the
remainder of this report gives relatively little consideration to safety issues in GA, it needs to
be kept in mind at all times that the risk there is real, significant and steadily increasing.
16
Detailed comparisons can be found in ATSB, 2013, p. 71.
17
Aviation Safety Institute (ASI), 2015, pp. 1-6.
61
4.4 The problem of small numbers
Statistical analysis of top-level, global (i.e. population-level) data can offer a quantitative
estimate of the likelihood of an accident occurring. However, once we try to drill down to a
more useful level of detail, such as would enable us to quantify the risk of a particular kind
of accident, or an accident occurring in an individual airline or even country, or of an
accident occurring within a given timeframe, such analysis becomes uninformative, because
the absolute number of serious accidents over a year or even five years, when set against
the number of passenger miles flown, is too small to support reliable inference.
There are four aspects to this problem. The first is simply that traditional inferential
methods cease to produce statistically significant results once the number of observations
falls below a certain threshold level, relative to the base rate for the “population” of
interest. Analysis of such small “samples” can be informative in a qualitative sense, but it
cannot provide statistically rigorous guidance for practice.
The second is that it becomes much harder to identify consistent patterns of causation
across different accidents. Since we are dealing with a context in which accidents seldom if
ever involve a single, direct and clearly demarcated causal chain, and each results rather
from the coincidence of a large number of disparate factors, each accident is effectively one
if a kind, resulting from a combination of events and circumstances which is unlikely ever to
be precisely repeated.
The third problem is that the observed number of accidents reflects a combination of
deterministic (or at any rate probabilistic) factors, which in principle are capable of being
identified and provided against, and simple randomness. This needs to be understood in the
light of Perrow’s theory of “normal accidents”,18 which has been highly influential in safety
science where complex technological and organisational processes interact. This theory
holds that once the level of complexity gets high enough, there will be a threshold level of
accidents which occur by simple chance, even assuming perfectly conscientious and reliable
individuals working in highly reliable organisations. Since this class of accidents is difficult to
provide against, short of ceasing the activity altogether, any conscious planning to minimise
known risks must be capable of distinguishing between the probabilistic and random
elements of causation. This becomes even more difficult than the simple identification of
causal patterns once the absolute number of accidents becomes very small.
The fourth difficulty is that where so few actual serious crashes occur over a decade or
longer, some of those which are available for analysis will no longer be recent enough to be
still relevant to present technology and practices.
Since the data that exist on actual accidents are insufficient to support useful inference, it
becomes necessary to base these calculations on things which occur more commonly – in
the internationally adopted terminology used by the ATSB, “serious incidents” (i.e. near
misses) and “incidents” – or on factors within the environment, the organisation or human
psychology that can be shown or hypothesised to be associated with those accidents which
have occurred. If the scope of analysis can be expanded to embrace these more
commonplace events, there is a chance that the kind of common patterns which were once
observable in real accidents will start to emerge once again.
This is what Drees and his colleagues have set out to achieve in their contract work for IATA.
Their initial output, reproduced as an appendix to IATA’s 2014 safety report, provides a
18
Perrow, 1984.
62
detailed conceptual framework which among other things, operationalises Reason’s concept
of “latent factors” to create a basis for the statistics to be discussed in the final section of
this chapter.19
4.5 The role of maintenance
Of the statistical studies available to this project, only two attempted specifically to quantify
the role of maintenance in air accidents. The more comprehensive analysis is found in the
aforementioned UK CAA report, which covers 250 crashes worldwide over the ten years to
2011. It identifies errors in maintenance or repair as the primary causal factor in only seven
of these (3%), though even at this level maintenance/repair error still represented the fifth
most common of the causes listed, only slightly behind environmental conditions (5%),
aircraft systems and components (5%) and engine failures (4%).20 In terms of the number of
people killed, it was a slightly more significant factor, accounting for 4% of total fatalities. It
was most likely to be the primary factor in the case of business jets (7%), accounting for only
1% of fatal crashes involving commercial passenger jets, and was also most likely to affect
positioning or ferry flights. When the statistics are broken down by region,
maintenance/repair error was most likely to be the primary cause in North America (11%),
with the important qualification that this represented only three accidents.21
The UK study further identifies errors in maintenance or repair as one of the contributory
factors in another four crashes, while “oversights” in maintenance and repair contributed to
one additional crash, and “inadequate maintenance or repair” to a further seven. “Failure to
carry out due maintenance” was the primary cause in one additional case and a contributing
factor in another. Depending on whether the partial contributory factors referred to the
same or different accidents, this could bring the total number of fatal accidents attributable
in some way to maintenance to as many as 20 (8%) or as few as 11 (4.4%). Other practices
commonly viewed as risk factors, including bogus parts, use of unqualified workers and
worker fatigue, were not identified as contributory factors within this period (bearing in
mind that the study refers only to crashes which resulted in fatalities).22
IATA in its latest safety report takes its statistics from the same database, but for the period
2009-2013. It identifies specific maintenance incidents as a direct contributory factor in 10%
of accidents worldwide, and 9% of fatal accidents. It was most likely to be a factor in crashes
involving cargo flights (12%) and perhaps significantly, in countries that had adopted the
IOSA reporting framework (14%), suggesting the possibility of significant under-reporting
elsewhere. Maintenance was also identified as a significant “latent” factor in 8% of all nonfatal crashes, 13% of those involving cargo planes, and 9% of all accidents occurring within
the IOSA reporting area. Disaggregating crashes by type, maintenance was a direct
contributory factor in 30% and a latent factor in 23% of accidents involving landing gear
failure, 21% (15%) of those involving in-flight damage (around half of which were engine
failures) and 11% of those which involved a loss of control in flight.23
19
International Air Transport Association (IATA), 2014, pp. 81-87.
20
Civil Aviation Authority (CAA), 2013, p. 35. It should be noted, however, that 26% of the accidents
covered did not have sufficient information in the investigation reports to allow a primary cause to be
assigned.
21
Civil Aviation Authority - UK (CAA), 2013, pp. 39-41.
22
ibid., p. 111.
23
63
It is not entirely clear from the published data whether those cases in which maintenance
was identified as a “latent” factor were additional to those where a specific maintenance
event was part of the direct causal chain leading to an accident. If the two categories are
meant to be additive, then maintenance would seem to be a much more significant
contributor than suggested by the CAA analysis, contributing to almost a quarter of
accidents involving cargo planes and nearly 20% of those within the IOSA area. However, it is
possible that the categories overlap – i.e. the “latent” cases were ones where poor
maintenance procedures or facilities were “an accident waiting to happen”, and in some of
those they resulted in an actual, observed mistake which led to that accident happening. In
either case, the importance of maintenance as a contributor to landing gear failure, in-flight
damage (the fifth most common type of accident) and especially loss of control in flight,
which is the second largest cause of fatal accidents and leads to the highest number of
fatalities,24 would appear to suggest that it deserves serious priority in safety management
systems.
Looking at the breakdown by region, maintenance over this period was most likely to
contribute to an accident in the CIS (i.e. the former core republics of the Soviet Union) and in
the Middle East/North Africa (14% each), followed by the Asia/Pacific region and Latin
America (11%), the last mentioned being the only region in which it is shown as a significant
latent factor.25 It would be tempting to see this as a commentary on the standard of
maintenance in the regions concerned, but such a conclusion is probably not justified by this
evidence alone, given firstly that the IATA regions are very large and far from homogeneous,
and secondly that the breakdown has been done by state of registration, so is not
necessarily informative about where the maintenance in question was actually carried out.
Comparing the CAA analysis with that of IATA, maintenance shows up far more strongly as a
contributor to accidents in the latter. Given that the dataset used by IATA (though drawn
from the same database) covers a somewhat later period than the CAA one, could one see
this as evidence that the standard of maintenance has deteriorated between the two
periods? Probably not, as IATA apparently takes a slightly different cut of the fleet and uses
a different analytical framework; besides which, the CAA study is silent about non-fatal
accidents.
Nevertheless, CASA in a recent Flightsafety bulletin argues that there is some evidence for
an increase in maintenance-related aviation accidents. It cites Boeing data giving
maintenance as the primary cause for 6% of all accidents over the last 10 years, whereas
over the full 40 years it averaged 3.4%, and also mentions that the number of maintenance
errors reported to the UK CAA has increased significantly over the last couple of years. The
same bulletin quotes airline data showing that between 20% and 30% of in-flight engine
shutdowns occur after maintenance problems, and around half of the engine-related flight
delays and cancellations are the result of maintenance errors.26 In any event, we cannot
confidently dismiss this possibility, and the differences between the CAA and IATA are
sufficient to suggest that any future studies using the same frameworks should be
scrutinised carefully for signs of change over time.
24
International Air Transport Association (IATA), 2014, p. 29; ICAO (2013, p.32) describes it as “the
major killer in civil aviation during the years 2006-2010”.
25
26
Civil Aviation Safety Authority (CASA), 2013c. The original article dates from the March-April 2013
edition. It is not made clear whether the airline data quoted relate only to Australian operations, or
are global figures.
64
It is also quite possible that there were some accidents to which poor maintenance
contributed, but where no specific departure from good practice was observed at the time
or identifiable after the event. In the IATA analysis, the proportion of accidents attributable
to aircraft malfunctions of one kind or another ranges from 20% in the case of runway
excursions up to 75% in the case of landing gear failure, averaging somewhere between 30%
and 40% for most classes of accident. There is of course no way of telling whether
maintenance was involved in any of these cases other than those specifically identified, but
these figures represent a kind of upper limit to the proportion of accidents to which
maintenance practices might have contributed. This point needs to be made simply because
our other statistical sources do not specifically identify the contribution of maintenance, so
its role can only be deduced from the number attributed to mechanical, airframe or aircraft
systems failure.
This is particularly the case for the Australian statistics. The most recent ATSB published
figures show that the four areas of failure to which maintenance is most likely to be relevant
(motive power, airframes, aircraft systems, and smoke/fumes/fire) made up around 20% of
the factors identified behind accidents or serious incidents in commercial air transport in the
decade to 2012. There is no indication of how many individual occurrences were affected by
these factors, nor does the publication give statistics for actual accidents. However, the
report states that the number of incidents related to aircraft systems grew by a factor of two
and a half over the ten years to 2012, with flight control problems now most commonly
reported on high-capacity RPT aircraft. The report also adds that:
In 2012, aircraft systems issues most commonly reported to the ATSB were
avionics and flight instrument-related, or affected air conditioning and
pressurisation systems. Electrical, flight control, fuel, and hydraulic system
issues all made up more than 10% of incidents.27
The estimates discussed above vary from one another to an extent which makes it clear that
the process of attribution is neither straightforward nor consensual. The best that can be
said is that statistics alone do not make it possible to resolve the differences of opinion, at
least with the datasets currently to hand. Following the normal rule in cases of uncertainty
where the public welfare is potentially at risk, the lack of consensus suggests the need for a
precautionary approach until more conclusive data become available.
4.6 Conclusions
Given the improving safety record of the last decade, is it now possible to say that air travel
is “safe”? Is it, at any rate, safe enough that many of the precautions traditionally applied –
especially in the case of maintenance – are no longer relevant and can now be substantially
relaxed? And if so, how far is it “safe” to relax them?
In the case of GA, the answer is clearly: no. The safety record in GA has not improved
noticeably so far this century, and indeed shows every sign of deteriorating. The record in
mainstream commercial aviation is far more encouraging. After several decades of
spectacular decline, the accident rate has reached a level so low that much of residual
variation can be attributed to simple chance.28 However, it is premature to say that the risk
has disappeared completely. Simple inference from the trend over the last ten years shows
27
Australian Transport Safety Bureau (ATSB), 2013, p. 85.
28
Airbus (2014) has nevertheless identified meaningful patterns of change by disaggregating the data
into “generations” of commercial aircraft, defined mainly by their avionics.
65
that chance alone could account for the numbers of people killed in accidents rising over the
1000 mark this year, or falling below 200, without indicating any substantial change in the
underlying factors. A further reason for caution is that the trend has reversed in the past
after some years of improvement, and the simple existence of a declining trend is not
sufficient evidence that it will be permanent.
The role played by maintenance is somewhat controversial, as shown by the surprising level
of variation between estimates based on essentially the same data. On all but the most
dismissive of these, it remains a significant factor in accidents, but not among the most
pressing concerns – it is notable, for example, that the ICAO does not include maintenance
in its priority areas for safety reform.29 On the other hand, the muted note of warning
sounded by CASA, in conjunction with a number of other individually inconclusive
indications, gives cause to monitor the records carefully for any evidence of a resurgence in
maintenance-related accidents as new waves of data become available. Given that it would
take some years for any growth in maintenance-related serious occurrences to emerge from
the normal annual variation, it should be treated at the very least as something of a
“sleeper” among the factors that lead to accidents.
Above all, we point once again to the finding from the CAA study that those few fatal
accidents which do still occur take on average 70% of the lives on board. Passenger aviation
thus falls into the “low probability, high impact” category of risks where statistical inference
provides very little guidance and complacency can all too easily take over. It is at this point
that we need to move beyond statistical evidence and look to safety science.
29
International Civil Aviation Organisation (ICAO), 2013b, p. 23.
66
Chapter 5 Safety Issues 2: Where do the risks lie?
In mainstream passenger aviation which is the main focus of this report, the main threat to
passenger and crew safety is arguably the threat of complacency. With rare exceptions like the
two Malaysia Airlines disasters, and the odd clearly alarming near miss like QF32, it is often hard
today for many of those involved with an airline – passengers, management, shareholders,
sometimes even aircrew – to remember that a risk exists. This is important in the context of the
dominant threat to the safe conduct of air transport – what James Reason, perhaps the most
respected of current writers on aviation safety, refers to as “the inevitable conflict… between
the goals of safety and production”.1
With the unrelenting pressure on airlines today to contain their costs, an operations manager in
a typical airline finds herself constantly stretched between, on the one hand, feedback on
emerging risk conditions which may be blurred, lagged, diffused over several locations which do
not necessarily communicate with one another, and above all sparse and very infrequent;2 and
on the other, feedback on business performance which is continuous, unambiguous,
unavoidable, and high-risk so far as her own professional future is concerned. In such
circumstances it is only to be expected that in Leveson’s words, “the redundancy and other
precautions added to protect against human error often degenerate over time as work practices
adapt to increase efficiency within the local environment”.3
In such an environment, statistical evidence is not enough to change behaviour, and the only
way to maintain awareness of risk is through a better understanding of the causal factors that
can lead to an accident. These factors and precursors occur far more often than actual accidents
and consequently can be observed on a regular basis, providing the basis for qualitative causal
models. While the subject is a complicated one and much of it of interest only to serious safety
scientists, an introduction to some of the basic concepts may be useful to explain why we
believe a significant risk still exists, and is capable of escalating in the future.
5.1 Two kinds of accident
Reason distinguishes between two kinds of industrial accident.4 The first category occurs in
“traditional industries involving close encounters between people and hazards”. As examples he
offers mining, construction, oil and gas, railway infrastructure and road transport – to which we
would add General Aviation (GA). Hazardous work in these industries typically involves
continuous and fairly direct contact between the worker and the sources of risk, creating
frequent and generally short-cycle feedback. Accidents in such industries tend to happen
frequently, the path between the initiating event and the actual accident is usually short, and
partly because of this, those who work in them can be expected to remain constantly alert to the
risks involved and maintain a focus on minimising and/or responding to them, even if (or maybe
1
Reason, 1998, p.331.
3
Leveson, 2004, p.247.
2
The quality of feedback is one area which is likely to be addressed more effectively by the regulatory
shift to safety management systems, to be discussed further in chapter 7. However, while these remain in
their infancy, it has yet to be demonstrated that they will result in safety considerations receiving greater
prominence in day-to-day commercial decisions taken in the back office.
4
Reason, 1998, p.293.
67
because) they are not always successful. Reason refers to these later in the same paper as “close
encounter” industries.5
The second category involves what he calls “modern, high-tech, well defended technologies”,
which include nuclear power plants, chemical process plants and commercial aviation. They
differ from the first type in that while the actual hazard may be just as great, it is possible to
manage it to reduce risk, and usually with great success. The efficient cause of most accidents in
such industries lies not so much in the pre-existing hazards, as in vulnerabilities inherent in the
measures employed to manage them and to reduce risks – and, paradoxically, in the normally
high effectiveness of those measures.
The “well defended” aspect means that numerous redundant safeguards are built into the
system and usually block the process leading up to an accident before it reaches the point of
catastrophe, often without conscious human intervention. The fact that they nearly always work
creates a new risk of its own, in that those who work at the “sharp end” tend over time to lose
their sense of present danger. Such safeguards typically involve high levels of complexity where
the causal chains leading to an accident are often neither easily traced back after the event, nor
easily detected in their early stages; the initiating event often takes place remotely from the
actual accident site, and the intervening incubation period can be extremely long. This last
characteristic was graphically illustrated by the loss in 2002 of China Airlines flight 611, a Boeing
747 operated by Taiwan’s national carrier which “unzipped” and broke up in mid-air with the
loss of all on board because of an undetected error in repairing panels after a tailstrike 22 years
earlier.6
An important group of causal models consists of barrier models,7 where the hazard is seen as a
given which lies beyond the power of the organisation to change, and attention is concentrated
on the barriers or safeguards which can be deliberately inserted either by organisations or by
the designers of the technology to block the otherwise inevitable causal chain leading from the
hazard to an accident. One of the most popular models for aviation is Reason’s “Swiss cheese”
model (SCM),8 which envisages a series of protective layers interposed between the pre-existing
hazard and the accident which would otherwise result from it. Reflecting the concept of
defences-in-depth, these contribute sequentially and redundantly to blocking the accident
trajectory. However, each has gaps in its protection – the holes in the slices of cheese – which let
a potential accident through to the next layer, and occasionally the “holes” will line up, allowing
a completed “accident trajectory” which results in a loss. Some of the “holes” represent
problems or inadequacies in organisational design, institutional regulation and management
control, while others occur randomly and their consequences can be contained only by
increasing the number of redundant defences.
Central to this model is a distinction between active errors – the mistakes, oversights and
malpractices setting off the causal chain towards a given accident – and latent errors or
conditions, which are persistent characteristics or practices of the organisation that in
themselves are not obviously dangerous, but create the continuing conditions for unsafe acts to
5
Reason, 1998, p.296.
6
International Aviation Safety Association (IASA), 2005.
7
Hollnagel, 2008.
Reason, 1990, 1997, 1998; Reason, Hollnagel and Paries, 2006. It is generally believed that the then
director of Australia’s Bureau of Air Safety Investigations (predecessor of the ATSB) first invented the label
“Swiss cheese” (Reason, Hollnagel and Paries, 2006, p.4), though perforated armour plate would probably
be a more appropriate analogy.
8
68
Chapter 5 - Safety Issues 2: Where do the risks lie?
occur, and for these to result in accidents. More recent versions of the model envisage a process
running from latent failures at the organisational level, through intervening factors (“local
traps”) specific to a given task environment, to active failures (unsafe acts originating with
individual people), which trigger a process that will lead to an accident unless the defences are
sufficiently robust and redundant to block it.9
Over time the emphasis of the SCM has evolved in line with changes in the problem it addresses.
Up until around the time when Reason developed his first version of the SCM, traditional airlines
were highly integrated enterprises which looked after not only their own maintenance, parts
sourcing, ground support, training and catering, but in earlier days their own terminals at both
the airport and the city end, and even their own ground transport. Thus most of the factors likely
to contribute to accidents were more or less within the airline’s sphere of control, so that it was
in a position to take a strategic approach to both commercial and safety considerations, built
around coordination of these directly owned inputs.
But just as in the last two decades it has become almost universal practice to outsource catering,
it is rapidly becoming the norm to outsource maintenance, and airlines in most centres compete
for terminal, runway and tarmac space at shared airports which are increasingly commercial
operations, while the different categories of services located within them, e.g. ground handling
support, security and baggage handling, are further outsourced to specialist businesses, many of
them covering more than one airport. Maintenance repair operation itself is becoming
increasingly diversified and specialised, with parts supply brokerage (including parts recycling
and remanufacture, known sources of risk) emerging as the province of a separate class of
enterprises. Aircrew and ground crew training in most parts of the world is moving away from
the old model of apprenticeship/cadetship with a particular airline and becoming the province of
public or private training organisations.
The result of this fragmentation is that the individual airline has come to depend for its safety
management, as well as for its commercial performance, on an extended and complex supply
chain, effectively a system of organisations, generally lacking the shared ethos, sense of mutual
loyalty and common information base which characterise the best kind of individual enterprise.
These networks can result in lengthy information paths, slow or imperfect feedback, and
strategic constraints on the sharing of important information. (We will cover these failure points
in more detail in the next chapter.) Together these often end up in a coordination problem
where no one airline is able either to identify emerging threats or to respond comprehensively
to them on its own, and the system as a whole lacks the responsiveness and perhaps the
motivation to provide a holistic response to the threat conditions emerging for any given airline
within it.
This growing element of system risk forces safety managers to concentrate increasingly on the
defences as the only part of the safety system which still lies mainly within the control of the
individual airline. Defences are also important because they are the only element in the safety
system which can be effective against the random element of causation – which, as noted
above, probably grows in relative importance as many of the past risks are successfully
contained.
To be effective, defences have to be available before the initiating event occurs, even if they
come actively into play only after it has occurred. They can include physical defences (e.g.
armoured cockpit doors, over-engineering of vulnerable components, removing potential
obstructions close to runways), technological defences (e.g. simplified cockpit instrumentation,
9
Reason, Hollnagel and Paries, 2006.
69
automated failsafes, fly-by-wire controls), rules and protocols (e.g. airworthiness directives by
the regulator, minimum qualification requirements to work on an aircraft, signoff requirements
for return to service after maintenance), information (e.g. notices and manuals, automatic
warning devices, self-monitoring equipment), and personal and motivational factors (e.g. a
professional ethos, a culture of continuous learning, or the right and willingness of workers even
at lower levels in the hierarchy to stop a process if they see a risk arising).10 In the terms of the
SCM, they represent the final slices of cheese before the loss occurs.
Foremost among the defences is the engineering of the modern commercial jet, itself a very
complex and well-defended system. Considering some of the disturbing maintenance practices
discussed by interview participants in our research, of which we give a sample in Chapter 6, the
low accident rate is a testament to the levels of robustness and fault-tolerance built into the
modern airframe. Even compared with superficially similar models from the 1990s, today’s
passenger planes not only fly for much longer without intensive maintenance, but appear to be
capable of withstanding less rigorous maintenance standards. This is due in part to the advanced
self-monitoring and self-correction capabilities which are increasingly being built even into longestablished models as new series come into service.
Many defences lie with the flow of airworthiness directives issued by regulators.11 Many lie
within the control of the individual airline and involve practices, protocols and the values
embodied in them, which interact with the prevailing regulatory system to create its safety
system. Reason characterises an organisation’s safety system as being driven by “a continuing
respect for the many entities that can penetrate, disable or bypass the system’s safeguards. In
short, it means not forgetting to be afraid.” 12 But where the safeguards, at least collectively,
nearly always work, being constantly alert to danger does not come naturally. In a well-defended
system, building a safety culture requires willpower and cognitive effort; and so an effective
safety system is often counter-intuitive. Maintaining that kind of counter-intuitive culture
becomes difficult when commercial pressures not only dominate day-to-day decision-making
but also form the most common rationale for major shifts in corporate structure and strategy.
In theory, the likely commercial consequences of a fatal crash ought to provide some kind of
countervailing incentive even for the most cost-focused management. In practice, however, that
incentive is severely diluted by the normal tendency to discount heavily for very low
probabilities.13 This, incidentally, is why it is so important to continue work on the development
This practice has been recognised as one of the key characteristics of a high reliability organisation
(HRO) as far back as the pioneering research on nuclear aircraft carriers in the 1980s. See Roberts, 1990,
p.171: “… Decision-making is pushed to the lowest level possible at least in the sense of vetoes… even the
lowest level participant can abort landings… when anyone sees a foreign object on the deck he can call a
halt to flight operations.”
10
11
For example, see the synthesis of Airworthiness Directives issued since 2007 by the Federal Aviation
Administration relating to various generations of the B737: Federal Aviation Administration (FAA), 2015b.
12
Reason, 1998, p.294.
Even where a major crash has occurred, some recent evidence suggests that it may not have a lasting
impact on the trading performance of the airline concerned. Bloomberg data accessed on line show that
the crash of Air France flight 447 into the Atlantic off Brazil in 2009 had only a short-term impact on the
airline’s share price, which remained on a stable or slightly rising trend over the four years it took to
recover the wreckage and identify the causes of the accident, with the frequent fluctuations bearing no
obvious relation to the release dates for different tranches of the inquiry’s findings. In the case of Asiana
flight 214, which clipped a wall while landing in 2013 and burned on the runway with the loss of the
aircraft and three passengers, the share price dipped by 25% a month after the accident, but returned to
its normal (albeit gently declining) trend over the full year (Bloomberg, n.d. but c. 2009).
13
70
of quantitative accident models capable of providing credible figures which can be set against
the financial numbers. In their absence, it is all too easy for redundancy to be dismissed as goldplating and for complacency to become a corporate virtue, enforced by numerous incentives
within the corporate culture, including both espoused and in-use employee performance criteria
and advancement within the company hierarchy.
A critical conflict can be expected to occur between redundancy as a tool of risk management
and a focus on efficiency, since redundancy by definition violates simplistic concepts of
efficiency. One of the most predictable consequences of this conflict is that the presence of
multiple, redundant defences will become a rationalisation for weakening an individual defence
– i.e. a blind eye will be turned to an unsafe practice at one point in the system, in the belief that
some other part of the system will catch and fix anything that goes wrong as a result. But
redundancy does not work unless each of these defences is taken as seriously as if it were the
only one standing between the hazard and an accident. As noted earlier, redundancy provides
the most reliable defence against the randomness of human error (i.e. the possibility for
mistakes to occur even when all the risks are apparently controlled). Its dilution, especially if it
occurs at multiple points in the system unbeknown to one another, opens up opportunities
(often very difficult to detect) for accidents to occur even in an otherwise well designed and
conscientiously administered system.
A more general consequence is likely to be a gradual, imperceptible loosening of the fabric of
safeguards across the whole system, such that most of its elements remain formally in place, but
each is enforced less strictly and with more flexibility as time goes on. This progressive
decoupling of the safety system can easily extend to the system of regulatory oversight, even
where national regulatory authorities resolutely withstand the market and political power of
corporate interests. Governments for whom deregulation has become a touchstone of political
virtue may afford limited support to regulatory agencies. Continual funding cuts may make it
harder to investigate accidents as thoroughly as they deserve, and the focus of monitoring and
audit may be shifted away from actual practice towards documentation of process – a trend
noted with concern by International Air Transport Association (IATA) in its 2013 Safety Report.14
At the same time the international regulatory scheme, though comprehensive in its coverage
and regularly updated, vests practically no enforcement powers in the International Civil
Aviation Organisation (ICAO), works largely through consensus and delegation, relies heavily on
the discretion of individual member nations to implement its provisions in detail, and is
increasingly diluted by bilateral agreements which override and effectively soften its provisions.
The average rate of implementation for basic safety reforms, as identified in the latest ICAO
audit, is a less than encouraging 61%. We examine the strengths and weaknesses of
international regulation in more detail in Chapter 7.
Signs of a deterioration in safety culture have emerged on a number of occasions over the last
few years – for example, in a number of recent accident investigations (most notably AF 447 15
and Asiana 214 16) which have exposed breaches of safe practice that one would not expect of
such reputable airlines; and in the need in 2014 for both major aircraft manufacturers and the
National Transportation Safety Bureau (NTSB) to issue warnings, within weeks of each other,
14
International Air Transport Association ( IATA), 2014, p. 74
16
National Transportation Safety Board (NTSB), 2014.
15
Bureau d’Enquêtes et d’Analyses pour la sécurité de l’aviation civile (BEA) (n.d. but c.2012) “Flight AF
st
447 on 1 June 2009, A330-203, registered F-GZCP: Final Report”,
http://www.bea.aero/en/enquetes/flight.af.447/rapport.final.en.php
71
against pilots relying too much on the avionics to fly the plane for them. Even the apparent
complacency shown by many airlines (including carriers like SAS and Lufthansa, not known for
taking unnecessary risks) about overflying the conflict zone in the Ukraine, together with the
failure of the ICAO to reach consensus on a new protocol immediately after the MH17 disaster,
could be seen as evidence of such a decline. The record number of incidents reported to the
ATSB in 2012 (in the case of high-capacity regular public transport (RPT), growing over twice as
fast as the number of departures over ten years) is a possible indication that while the defences
remain effective for the present, the number of threats or initiating incidents may be on the
rise.17
We stress that we have not been able to produce conclusive evidence of a general decline in
safety culture, and thus are in no position to predict a resurgence in the accident rate.
Nevertheless, there is evidence to suggest that it could occur, and once under way, could
escalate rapidly. For the present we can only identify the risk factors in the hope that they will
be monitored more closely, and fall back on the words of the Roman poet Lucretius: “Let it be
logic that convinces us, not the actual event.”18
5.2 Known risk factors
We move now to more practical areas of risk which have been identified in the literature or
through our qualitative research. Some of these have been part of the industry culture for years
and already apply to the kinds of aircraft currently in service, while others are likely to grow in
importance as aircraft of the next generation become more common. These risks can be
expected to apply regardless of whether the theoretical risk factors discussed in the last section
play out in reality, but in cases where they do, the consequences can reasonably be expected to
manifest themselves in areas such as those listed below.
Pressure, disorganisation, regulatory failure: The Lead Investigator for this project has
conducted extensive research over several decades on accidents in a range of industries, and has
found that these three factors are present, and interact to reduce safety, in a high proportion of
accidents across both close-encounter and highly defended industries.19 The model is based on a
combination of financial pressures, causing workers and managers to cut corners and work too
fast; hazardous forms of disorganisation, including weakened training, induction and supervision
regimes, the fracturing of formal and informal information flows amongst workers, dissonance
between multiple employers or different parties in a subcontracting chain, and the isolation and
inability of subcontracted workers to organise to protect themselves; and regulatory failure,
including insufficient coverage, shortcomings in implementation and relaxed enforcement. 20
This failure is exacerbated by difficulties in ensuring minimum legislative standards, allocating
employer responsibility, and monitoring and enforcing laws in diffuse or multi-employer work
sites. Subsequent research identified, in addition, spillover effects arising from such factors as
competition of casual workers for permanent jobs, eroded conditions, pay and allowances, and
Australian Transport Safety Bureau (ATSB), 2013, p. 12. The qualified conclusion stems from the ATSB’s
caution, in regard to commercial air transport generally, that reporting requirements have changed during
the period. However, this is less likely to affect the statistic for high-capacity RPT, which has always been
closely monitored and where incidents tend to be much more publicly visible.
17
18
De Rerum Natura V: 109
20
On safety along supply chains, see Gregson et al., 2015.
19
The literature supporting this model is reviewed in Quinlan, 2014.
72
work-life conflict.21 A historical survey of aircraft accidents in the US has shown strong evidence
that the same combination of factors applied in those cases.22
Work intensification and extended work hours: This was one of the most common problems in
Australian-based maintenance to be reported in our interviews and the free-response section of
our survey. Given what is known about current staffing levels in Australia, and shortfalls in the
supply of fully qualified staff in many other countries, it is only reasonable to expect that the
consequences of overwork will appear more often over the next decade or so.
Use of unqualified or inadequately trained workers: Australian Licensed Aircraft Maintenance
Engineers (LAMEs) whom we interviewed commented frequently on the use of unskilled or at
any rate unqualified workers to do many of the more routine tasks in overhauls they had
inspected or supervised at overseas Maintenance Repair and/or Overhaul Organisations (MROs).
Some of the mistakes they made (notably scribelines) could have had serious impacts on the
airworthiness of the plane.23 Another feature commonly reported, even among reputable
overseas providers, was the very high ratio of unlicensed to licensed workers, meaning that it
became difficult or impossible for the person who certified the maintenance to make sure by
personal observation that it had been carried out properly. Further examples from the ICAO
discussed in Chapter 10 attribute this issue to the training of insufficient workers to meet ICAO
benchmarks for maintenance staffing ratios. It is thus important in Australia to ensure that the
recent decline in training effort does not similarly eventuate in such shortages of skilled workers,
flowing through into a relaxation in safety oversight.
Ageing aircraft: While most aircraft now in service are capable of operating safely over a very
long lifespan if properly maintained, it is generally recognised in the industry that the accident
record of any given type follows what is known as a “bathtub curve”. There tends to be a high
incidence of accidents and maintenance problems in the period immediately after the
introduction of a new aircraft type to service, falling away rapidly into an extended period in
which accident rates and maintenance problems plateau at a level where routine scheduled
maintenance is adequate to ensure their airworthiness, but rising sharply again at a certain
point, beyond which it eventually becomes uneconomic to keep the plane in service. Recent
analysis by Airbus of four generations of jet design (defined largely by their avionics) shows a
classic bathtub curve in both fatal and hull loss accidents for the second generation (roughly
speaking, those which had their engines mounted at the rear), calculated on the basis of tenyear rolling averages, with the third (early 737 models, etc.) and fourth generations also showing
a classic pattern for the first half of the curve.24 Based on this analysis, the older models
represent an airworthiness risk which will need to be addressed by intensified and more
frequent maintenance. The problem is less likely to emerge for main-route passenger aircraft in
countries like Australia, since hardly any of the first or second generation aircraft remain in
service here except in freight or charter service, and there is a growing trend for operators in
advanced countries to sell off their aircraft at a fairly early stage in their design life –
increasingly, before they fall due for their first D check.25 However, for just that reason, it can be
expected increasingly to affect operators in less wealthy countries who often lack the resources
21
Quinlan et al, 2013.
23
On scribelines, see also Department of Civil Aviation Malaysia (2005).
24
Airbus, 2014, p.9
22
Quinlan, 2013.
25
Holland and Davies (2103, pp. 4-5), cite a comment by Brown that” the market is awash withj rotables
from newer aircraft being broken up for spares”.
73
to keep up maintenance to the level required. Needless to say, the problem is as pronounced in
Australia as anywhere else for GA, and to a lesser extent for the lower-capacity element of
regional services.
Longer intervals between checks: As noted in Chapter 2, the generation of passenger aircraft
now coming into service will continue the long-established trend of requiring ever-greater
intervals between major scheduled overhauls. In many cases, as just noted, even currentgeneration aircraft may pass through their entire service life in an advanced nation without
falling due for their first D check. It is reasonable to assume that they have been adequately
engineered to perform reliably for these extended periods without stripping and disassembly.
However, the long intervals between major inspections mean that if a mistake is made in one
check or overhaul, it may be years before the opportunity arises to locate it by systematic
inspection, creating a new risk factor of dimensions that have yet to be determined.26 Possible
uncertainties created by changing service intervals may be increased by the trend to re-bundle
aspects of the B and even the C check into expanded A checks, which are generally classified as
line maintenance, and potentially open to being carried out by staff who cost less to employ
because they are less well trained.
Overreaching: The growth in world demand for air travel, and hence for new passenger aircraft,
continues to outstrip earlier predictions. As the projections continue to grow, more doubts arise
as to whether the capacity exists for manufacturing and maintenance supply to keep pace with
the demand without severely affecting quality. At the manufacturing end, questions have begun
to be raised about whether either Airbus or Boeing will be able to increase capacity sufficiently
to handle even the existing order books, let alone the proliferation of new models scheduled for
release this decade.27 Doubts also exist about the capacity of component suppliers to step up
their output to the level required while still maintaining acceptable quality standards. 28
Any systemic problems that emerge with the quality of manufacture (especially the manufacture
of parts) will need to be met by tighter maintenance schedules and more frequent inspections,
possibly frustrating the common expectation that maintenance demands will fall rapidly from
now on. At the same time, the supply of adequately skilled maintenance personnel is already at
crisis level in many parts of the world, and current indications are that the demand will continue
to grow faster than the capacity of the global training system – a major theme of Chapter 10. To
the extent that supply can keep pace with demand, an ever-burgeoning expansion of aviation
activity seems to fit poorly with the current trends throughout the world to loosen regulatory
requirements and reduce the funding available to enforce those which remain.
The risk of labour supply falling behind demand is one of the main reasons for viewing
maintenance as a “sleeper” factor that could lead to a rise in accidents in future. Already
industry newsletters 29 make increasingly frequent mentions of a growing shortage of pilots and
cabin crew, especially in Asia, and of efforts being made to increase the training effort, and/or to
reduce the times spent in training. It is hard to believe that the similar shortage has not begun to
affect maintenance labour supply as well – indeed, some of the observations reported in
Chapter 6 seem to confirm that this has been the case for some time. A clumsy pilot or a poorly
trained flight attendant will be readily obvious to most people on board. But it may be much
26
See for example, Al-Jazeera, 2014 on reports of manufacturing faults in new aircraft.
27
The Economist, 2014.
29
For instance, AviationCV.com, 2015.
28
See for example Gates, 2013, as one example of a larger conversation around the role of subcontracting
in B787 electrical system and battery issues.
74
harder for passengers to notice a decline in the quality of maintenance. Such a decline may
continue to be neglected until something goes seriously wrong.
As we point out in the final sections of this report, the exploding demand can be seen from one
point of view as providing massive opportunities for Australian industry. However, the flipside of
these opportunities lies in the dangers they create if they are not adequately taken up.
5.3 Independent assessments of risk factors
IATA is the only reporting body, of those cited in the previous chapter, to provide a narrative
section on specific risks underlying maintenance-related accidents. In its 2013 Safety Report 30 it
notes outsourcing as a key risk factor, reporting that
…very few MROs are capable of completing a large work package … to a high
standard under normal time pressures. MRO certification is not a guarantee of
work quality.
This report argued that maintenance certification, including Certifying for Release to Service
(CRS), is a risk area because the required procedures for clearance do not necessarily guarantee
the quality of the maintenance itself:
In many cases, too much effort and legislation is put into oversight of the
documentation trail, rather than the repair work being physically performed on
the aircraft. For example, whoever certifies an aircraft is airworthy must be
certificated, however those who perform maintenance work do not necessarily
have to possess any licensing credentials. 31
It added that “there are some anecdotal cases where the primary concern was that the
paperwork for a work package was not done, when in reality the work itself had not been
completed.”
The IATA 2013 safety report also expressed concerns over sourcing of parts, including what it
called “bogus parts” and “rogue parts”, “reused without being properly certified or checked for
serviceability.” These were said to include very old parts, inappropriately refurbished and put
back into service, and parts used to prolong the interval until the next scheduled major service.
The IATA report cited human error as a “leading factor in maintenance aircraft incident events”
and recommending closer investigation of the causes of human error and tighter auditing of
human factors.
A United Kingdom (UK) Civil Aviation Authority (CAA) safety overview report classified
maintenance-related causes of fatal accidents under a number of headings.32 In contrast to the
IATA report, it ruled out bogus parts, unqualified workers, incompetence and fatigue as factors
contributing to the accidents it reviewed.
Further reviews of maintenance concerns were carried out by the Federal Aviation
Administration (FAA) and European Aviation Safety Agency (EASA), independently in 2010, and
on a coordinated basis in 2014. As it appears that this research has yet to be fully written up for
30 International Air Transport Association (IATA), 2014, pp. 74-5. Emphasis added and typographical errors
corrected.
31
32
Ibid.
Civil Aviation Authority - United Kingdom (CAA), 2013.
75
publication in a scholarly journal, we have been forced to rely on a summary published in a
bulletin by a senior FAA official. 33
In the two FAA and EASA surveys carried out in 2010, three common themes emerged across
both continents as the most frequently mentioned: worker fatigue, the inadequacy of safety
cultures, and how to measure the impact of human factors training programs. Other factors to
make the top five in North America were difficulties in using technical publications, and
problems with a system of voluntary reporting (or possibly, disincentives to reporting in a nonmandatory framework). In Europe, the remaining two places were taken by European Unionspecific problems: how to arrive at standard regulation across 28 separate national regulatory
authorities, and the need to expand human factors training into those nations where it was not
yet readily available.
In 2014, when a single online survey was used on both continents, the top five concerns in order
of frequency were “culture/leadership” (presumably meaning management attitudes towards
safety), problems with technical publications, worker fatigue, voluntary reporting, and
measuring the impact of human factors training. Together these made up 67% of the combined
responses, with technical publications and fatigue mentioned by half or more of the respondents
on each continent. Taking the response sets separately, oversight and regulations made up the
list in Europe, while “human factors training”, “pressure/stress” “measuring impact” and
“voluntary reporting” tied for fourth place in North America.
The 2014 survey included a free-response section which appears, based on the summary, to
have produced some very enlightening feedback. As coded and summarised by an FAA
employee, the additional challenges identified in this section included “managing to outcomes
rather than process” which was said to have led to a perception by the workforce that “our
procedures aren’t important enough to adhere to”; management making a conscious decision to
lower the bar on safety culture; difficulties in applying Reason’s concept of a “just culture”
(presumably meaning an ongoing tendency to tackle identified mistakes by punishing
individuals); poor compliance with officially specified processes and procedures; the need to set
legally enforced maximum hours of duty for aircraft mechanics; and a tendency to bypass the
maintenance manual in operations that had become very routine, e.g. tyre-changing.
It would be unwise to place too much reliance on these surveys, given that the sampling strategy
appears to have been reasonably unstructured (a combination, apparently, of volunteer and
convenience sampling) and the achieved sample in 2014 was a mere 51, with North America
heavily over-represented. However, it is impossible to overlook the strong similarities between
these findings and the concerns which have arisen out of our own research, suggesting that the
problems faced by Australia are common ones shared by other advanced nations.
5.4 Conclusions
The qualified reassurance emerging from the previous chapter is somewhat offset by the
arguments summarised in this one. In estimating the likelihood of an accident, the main
difference from the past is probably that a great many more things now need to go wrong
simultaneously before really serious consequences ensue. Thus, the things going wrong will be
now increasingly be ones that could not have been easily foreseen. This means that the risk still
exists even in the most sophisticated and consciously protected system.
The main argument for continuing vigilance is that the opportunities for multiple things to go
wrong at the same time appear to be gradually increasing. This circumstance is due to a steady
33
Johnson, 2014
76
but mostly unremarked growth across the board in the amount of slack being introduced into
the various systems that protect aircrew and passenger safety. This word needs to be treated
with caution, since organisational slack (in the sense of having more people and time than the
bare minimum required to do the job in hand) is recognised as a necessary precondition for a
high-reliability organisation34 — and appears to be noticeably on the decline in both airlines and
contract MROs today. However, in a system made up of different organisations, with different
interests and motivations, interacting through intermeshed supply chains, system slack (used
here in the different sense of progressive decoupling) is more likely to manifest itself in a
growing number of loopholes through which mistakes can slip.
What we seem to be witnessing (though it cannot yet be conclusively demonstrated) is some
ongoing erosion of “collective mindfulness”, to use Weick’s term.35 In part, admittedly, this
erosion appears to be a rational response to the continually improving statistics, but equally it
appears to be a response to growing pressures at the management level to prioritise efficiency
over safety. The trend implies that the often sincere attempts of some organisations within the
system to develop characteristics of a High Reliability Organisation (HRO) face the risk of
degenerating into espoused values or processes that exist mainly on paper – a trend matched by
a regulatory system which seems increasingly focused on paperwork rather than practice.
As protective systems become more loosely coupled, the defences at the “sharp end” need to
become more effective in detecting and responding to the threats which pass through the
emerging gaps. Airlines are fortunate today in that the most important currently available
defences come packaged with the plane. However, the human element remains, and with it the
need to become more agile, alert and informed in order to recognise and effectively manage the
unique, unprecedented combinations of events which increasingly make up the preconditions
for a fatal accident.
In these circumstances, airlines (and their customers and employees) are becoming more
dependent on the quality of the human defences at the “sharp end”. In the area of maintenance,
which is less visible to the passenger, the key strength or risk (as the case may be) lies in the
quality of inspections and tests to which a plane is submitted before being put back into regular
service. In this environment it is vital that those doing the checking are sufficiently trained to
detect and make sense of non-routine problems, but just as importantly, that their technical
expertise is respected by management and their informed judgements are not overruled.36
However good the original intentions of an organisation may be in this regard, the practical
commitment will be vulnerable in times of commercial stress unless it is backed up by some kind
of institutional support. In Australia, as in most other national systems of aviation regulation,
this has traditionally been provided by the licensing mechanism which equips the LAME with the
delegated authority of the state, even while working within an employee relationship. As we will
argue in Chapter 7, this mechanism could come under challenge within Australia as a result of
the current process of national regulatory reform, and becomes markedly less effective once the
maintenance moves offshore.
34
See Hopkins, 2007, p.9.
35
Weick et al. describe collective mindfulness as the characteristic of an organisation which “captures
discriminatory detail about emerging threats and creates a capability to swiftly act in response to these
details” (Weick et al., 1999; Weick & Sutcliffe, 2006)
36
Weick and Sutcliffe, 2001, p. v; Hopkins, 2007, p. 10.
77
78
Chapter 6 Offshored Maintenance and Safety
6.1 Introduction
Over the past decade, the outsourcing of maintenance beyond national boundaries has ceased
to be a departure from established practice, and become increasingly the norm in all parts of the
world. As this has occurred, the ability of national aviation safety regulators to manage the
quality and safety issues for which they have responsibility has been increasingly challenged,
while the emerging risks have also served to highlight inadequacies in the international
regulatory scheme. Describing the risk factors and the regulatory challenges, and looking for
possible means of remedy, is our main focus in this chapter and the next.
This underscores that since 2006, the issue of offshoring, particularly of the heavy maintenance
of large wide-bodied aircraft has become a contested one. On the one hand is the business case
argument that heavy maintenance is better concentrated in the large hangars of maintenance
repair organisations (MROs) such as Hong Kong Aircraft Engineering Company Ltd (HAECO) and
subsidiaries of those airlines such as Lufthansa and Singapore Airlines (SIA) who have moved into
the heavy maintenance market. High-volume heavy maintenance providers are thus thought to
have the scale advantage of a continuous workload. Though their cost advantages are
diminishing with the global realignment of exchange and wage rates – such MROs at present
tend to be located in areas where labour is cheaper.
Against these considerations are the safety issues raised by the offshoring of aircraft. This
chapter reviews some of our evidence on such issues. It argues that the instances of safety
problems we describe are sufficient to raise concerns in the context of the weakening of the
safety oversight regime described in Chapter 7. The two chapters together argue that we
cannot be confident in the safety oversight of offshored maintenance, and it follows, of the
quality of work performed in some offshore MROs. These concerns will only increase because
countries in our region will be the hardest hit by a growing global shortage of skilled
maintenance personnel, a point which forms the substance of Chapter 10. The immediate
remedy lies in an adequate system of regulation. The medium term solution is to start rebuilding
Australia’s own maintenance capacity, and the longer-term solution is to become a new
exporter of maintenance and maintenance training, to take advantage of the Asia-Pacific
maintenance shortfall, which will begin emerging in the next ten years.
The central focus of this chapter and the next is thus the growing difficulty of regulating
maintenance safety and quality, including across national borders. These issues are analysed
within a broader framework of agency and risk management theory, in which offshore
maintenance is seen as a subset – albeit a particularly problematic one – of the issues that are
commonly recognised to arise from outsourcing, and from supply chains in general.1 The chapter
begins by setting out, at a theoretical and conceptual level, the potential issues that may arise in
the management of outsourced contracts — issues to do with agency, the balancing of interests,
and information. It then moves on to provide empirical examples attributable to these issues.
These examples highlight instances of the dilemma of maintaining the integrity of national safety
management systems whilst respecting the sovereignty of other nations. The examples are
provided in an effort to pinpoint areas where divergences in standards and oversight have
created either safety or jurisdictional dilemmas.
1
Quinlan et al., 2013; Gregson et al., 2015
79
While the impact of this evidence is diminished because it is old, on the other hand it is
significant because it shows that there have in the past been serious violations of safety
protocols, and the vacuum of similar reportage does not mean that serious safety problems are
not occurring right now.
It is also unfortunate from a research perspective that the best available evidence of potentially
unsafe practice in offshore maintenance shops was provided by workers who can be seen as
having a vested interest in protecting their future livelihoods from the threat of offshoring. In
the absence of rigorous and up-to-date academic research, and in view of the difficulty
researchers had in gaining access to overseas MRO shopfloors, it has been necessary to rely on
such information, as well as that gleaned from a variety of industry sources. In this instance the
self-interest is at least clear and identifiable, and can be balanced against the reality that the
best people to provide information about what happens on the workshop floor are those who
have worked there. This said, we have been rigorous in filtering the large body of narrative
evidence which has come our way, and in using only those accounts which are most clearly the
product of direct observation or participation within a reasonably recent timeframe.
The examples are cited primarily as evidence that poor practice can occur, and that when it
occurs offshore, the existing regulatory framework – in Australia, in the source countries and in
the international arena – has been less than fully effective in containing it.
6.2 Agency and information problems in contract maintenance
In moving to contracting-out maintenance, the air operator gives up much control over the
maintenance of its planes. It loses the sense of direct responsibility for the quality of the work
that goes with working on its aircraft, and at the same time the maintenance provider may lack
the sense of end-of-line accountability which would exist if it were flying the plane and directly
responsible for the welfare of crew and passengers. The operator loses the specialised
knowledge of particular systems and processes, including the history of particular components,
that would normally reside on the shop floor or in company information systems. All these
factors mean an arm’s length relationship between the operation of the aircraft and its
maintenance, in which moral (if not legal) accountability can easily fall through the gaps.
In the past, decisions about which maintenance operations were to be performed, and how,
were taken from the air operator’s perspective. Now, whether the third-party contractor is
onshore or offshore, maintenance decisions are increasingly shaped through the relationship
between the operator’s continuing airworthiness management processes and those of the
maintenance vendor. The relationship operates through the mechanism of a contract where, by
definition, the interests of the two parties do not always coincide. This discrepancy of interests
results in what is called a principal-agent or agency problem. (Where an independent continuing
airworthiness management organisation (CAMO) is involved as an intermediary, there may
obviously be more than one agency issue.)
The most common manifestation of this problem is a compliance approach in which the
contracted provider does only what is precisely set out in the contract. This approach can be a
particular hazard where a contract specifies work to be done within a particular timeframe –
given that each day a plane is out of service is costly to the airline, it wants the work done as
quickly as possible, and if the work is not completed within that time, heavy penalties may
apply. The discovery of unexpected maintenance issues, like a piece of corrosion or cracking,
may cause problems if the extra work and the time it takes fall outside the scope of the contract.
To perform new work may require contract renegotiation and/or lengthening of the time the
plane is out of service. In some circumstances, the vendor might find it less trouble to abide
strictly to its contract obligations and ignore the work needed. Alternatively, it may go through
the motions by “pencil-whipping” the additional work required (signing it off as completed when
80
Chapter 6 - Offshored Maintenance and Safety
it has not been), or performing it too quickly to be effective (for example by not properly
removing corrosion but covering it up with filler and paint) in order to meet a deadline which it
sees as its primary contractual obligation.
An alternative risk is that either party to the contract, or in some cases both parties, may have
both the opportunity and the incentive to game it. Where there is pressure to return the plane
to service, both sides may have an interest in deciding to “bury” the offending defect by
agreeing to not define it as a defect, or to defer dealing with it. Conversely, if the maintenance is
ahead of schedule and there are no other contracts in the pipeline, the vendor has an incentive
to define minor imperfections as defects in order to over-service and create work for itself. Our
industry informants have provided evidence that this kind of gaming is not as fanciful as it might
sound:
The contract was written at a fixed price for routine work, but all work arising
was charged extra, so the MRO workers would spend more time on those jobs
as they made more money, the majority of these were minor cabin appearance
issues, not airworthiness issues.2
Another risk that arises in the first kind of situation is a loss of the whole-of-plane approach to
maintenance. Since the maintenance provider sees its responsibility as beginning and ending
with the contract specifications, it may feel that it has no responsibility once the work is done to
check it in conjunction with the functioning of the remainder of the aircraft, as would generally
be the case if the operator were doing the maintenance in its own workshop.
A straight contract maintenance to do just what they’re told to do, they can
give you back an aircraft with a cracked frame. 3
The contract maintenance does exactly what’s in the contract. If you’re going
in there to just do a certain task and it’s not an inspection, irrespective of what
damage is around there, they do the task and close it up because that’s the
contract. 4
We must repeat that we have no reason to believe such cavalier interpretations of contract
responsibility are general or even common. However, we have had ample evidence presented to
suggest that they do happen, and will set that evidence out in the next section of this chapter.
The important point to make is that the contract relationship may provide inbuilt incentives for
such malpractice unless either the contract is very carefully written, or the activity of the
provider is adequately monitored.
During the first wave of regular Qantas offshoring, which ran roughly from 2006 to 2009, such
monitoring was common practice. Teams of licensed aircraft maintenance engineers (LAMEs),
professional engineers and managers were sent overseas with the planes to check on safety and
the quality of maintenance, as well as to safeguard the airline’s interests in the case of conflict.
This practice continued until about 2012, when LAMEs reportedly ceased to be included in the
inspection teams. It is not clear how much of this activity Qantas still carries on, or the extent to
which other Australian airlines that outsource to overseas vendors carry out a similar inspection
regime. However, in the absence of LAMEs who might have been prepared to report on their
experience, our evidence on practice in overseas shops is effectively limited to that six year
period.
2
Survey respondent #10350.
3
Interview, former Inspector and Maintenance Manager, 2011.
4
Interview, former CASA official, 2012.
81
Another important consequence of outsourcing, unrelated to the agency problem but often
exacerbating its impact, is that the airline loses its own capacity, not only to do the kind of work
in question, but to determine whether it has been properly done. One common consequence is
the loss of corporate memory about particular aircraft, their individual quirks and known failure
points as well as particular knacks required to keep them operating safely, which would normally
accumulate within the airline’s own workshops. This problem is likely to get more acute in future
as the maintenance on new-generation aircraft becomes wholly outsourced and the workforce
remaining in the operator’s own shops never gets the opportunity to become familiar with the
technology used in these types.5
A case in point from the recent past involves one of the most widely acknowledged success
stories of the previous maintenance regime, the engine line at Sydney. Qantas used to be
regarded as having world’s best practice in the maintenance of Rolls-Royce RB211 engines, and
Rolls-Royce engineers would visit this line to learn about the techniques used there. However,
Qantas closed the line in 2009, outsourcing the work to Singapore and Hong Kong to save costs,
with the loss of 360 jobs. The Australian Licensed Aircraft Engineers Association (ALAEA) in its
submission to a Senate inquiry in 20116 listed a series of relevant events, starting with a Federal
Aviation Administration (FAA) airworthiness directive (AWD) for the RB211 Trent series engine,
which required work on these engines – used by Singapore Airlines and Lufthansa – to correct a
tendency to fail. Five such failures, with degrees of severity ranging from “massive uncontained”
through “uncontained” to “contained”, occurred in Qantas planes between August 2010 and
October 2011. By then Qantas lacked the ability to correct this problem itself, and the overseas
MROs to which it would have otherwise outsourced the work were fully occupied doing work for
Singapore and Lufthansa.
The engines that had failed on Qantas have been all done outside of Australia.
If you look back through Qantas’ history, tell me the last time an Australian
maintained overhauled engine failed.7
Given the growing evidence of an emerging skill shortage in MRO throughout the world, which
we cover in more detail in Chapter 10, we see this as a precedent that is likely to be repeated
increasingly often over future years.
6.3 Evidence of quality problems in offshored maintenance
The more important C and D checks on a metal airframe require very labour-intensive strippingdown of the aircraft in order to inspect for cracks and corrosion. Although hull inspection and
the rectification of structural, mechanical and other faults clearly require skilled and suitably
certified labour, many parts of the preliminary stripping-down and subsequent refitting,
including much of the removal of the interior, along with cleaning of parts and similar work
which is not in itself critical to airworthiness, lend themselves to being carried out by workers
with lower levels of formal qualification, provided adequate qualified supervision takes place.
However, to take one example, mature, advanced paint removal technologies use nonhazardous processes such as blasting with starch or plastic, or lasers, accompanied by nondestructive materials testing (NDT) processes, or most recently use of robot/unmanned aerial
5
Increased use of rotables (parts from reasonably new aircraft taken out of service) may also contribute
to loss of knowledge of an aircraft’s performance and maintenance history. See Holland and Davies, 2013,
pp, 4-5.
6
Australian Licensed Aircraft Engineers Association (ALAEA), 2011, pp.37-38.
7
Interview, CASA Inspector, 2013.
82
vehicle (UAV) surface scanners. Paint removal can have important impacts on airworthiness if it
is not done carefully and under knowledgeable supervision, as faults can lie dormant for many
years before producing catastrophic results.
The most commonly encountered instances involved what are called scribelines, small scratches
made in the aircraft hull as a result of using inappropriate tools to remove sealant from panel
joints or around external fittings, or paint from the hull surface. The problem is that approved
tools (soft scrapers made from perspex, which will not scratch metal) are not as efficient for
paint removal as prohibited tools like paint scrapers, screwdrivers, pocket-knives and even
angle-grinders – all tools that our interviewees have reported as having been used in offshore
facilities. With repeated cycles of pressurisation and depressurisation, such apparently trivial
and inconspicuous scratches can eventually develop into cracks and tears, and/or cause fatigue
cracks and aircraft disintegration.
According to an Airworthiness Notice (AWN) 8 issued by the Malaysian Department of Civil
Aviation, concern about scribelines goes back to a 1988 incident in which an Americanregistered Boeing 727 “experienced cabin decompression after the fuselage skin peeled off from
its stringers. The National Transport Safety Bureau (NTSB) concluded that the skin failure was
the result of “scribe mark” scratches which was [sic] introduced during the aircraft
maintenance”. The AWN went on
It is obvious that such “scribe mark” scratches, if not repaired, will initiate
fatigue cracks and resulting in widespread multi-site fatigue damage (MSD),
which would result in rapid decompression and loss of aircraft in flight.
Boeing in 2004 required special inspections on its 737s, made changes to its structural repair
manual and issued AWDs to take extra care with scribelines. The Malaysian AWN explicitly
required MROs to take special care to avoid generating scribelines with unapproved tools.
However, despite the existence of a current AWN and the fact that scribelines were by now one
of the most commonly recognised hidden faults in heavy maintenance, Australian inspectors
supervising maintenance only a couple of years after its issuance continued to find instances of
unsafe sealant removal practices. In the case described below, workers were subject to time
imperatives, they cut corners with the process, and only the efforts of a diligent manager with a
commitment to safety found the poor quality work and demanded it be redone to standard.
They were just walking around with knives cutting sealant off skin panels,
leaving these scribe — quite heavy scribelines in some cases and when we were
finding these and bringing it to their attention they were in that case definitely
just hiding the defects. … Well, they were told to rework it in accordance with
the SRM (Structural Repair Manual) and then allow us to inspect it...
I returned the next day, … the sealant was on and the paint was already
applied. I said well, hold on a sec guys, I asked for us to inspect this. Oh no,
that was going to take too long because we did this on the night shift and you
were going to hold us up and I said well, I don’t care, take it off and it started a
whole hoo-hah. … I had to sit down with the managers, I had to sign … a
customer agreement form basically that said I agree to the extra man-hours
8
Department of Civil Aviation Malaysia, 2005. This Airworthiness Notice claims that one Boeing 737,
having experienced scribeline damage in the mid-1990s, went on to develop a 10-inch crack, and that one
operator has decided to retire a similarly affected aircraft early.
83
required to remove this and we’ll pay the bill and everything else. So I insisted
they pull it off, when I pulled it off the scribelines hadn’t been repaired.9
In the following case, inspectors had to uncover the causes of slow decompression on one of
two Boeing 747s Qantas had purchased from another airline immediately after they had
undergone D checks.10 The two became known within the industry as the “Ugly Sisters” because
they were plagued with faults. The cause of the decompression turned out to be a long vertical
(around the body) crack in the frame, which was deemed to be the consequence of the use of
non-approved tools in paint removal. The scribe line had subsequently been covered up with
sealant, which had started to lift from the frame as a result of the pressure exerted from within
the fuselage. The crack in the frame resembled a pencil line, visible as a crack only through prior
knowledge. The incident is a dramatic “free lesson” in the dangers of using non-approved tools
in paint removal.
In other areas of heavy maintenance, informants had found examples of pencil-whipping, often
under management pressure. The instances reported were picked up by observant inspectors,
but it seems reasonable to assume that many similar occurrences of non-compliant work may
have passed undetected.
I noticed several incidents in which systems tests were signed off as done when
there was no test equipment available to carry out the tasks. I noticed the
pressure applied from management to certifying staff to “just do it”. 11
All four engines were off the wing on engine stands with easy access inside and
out – zero defects were found on all four engines! This is impossible! I
personally redid the inspections myself and found approximately 80 defects, 11
of which were engine disconnect plug replacements. They missed a migrated
truck pivot bearing that resulted in the L/H body gear having to be removed.
They installed an entire galley before the waterproofing was completed. They
lowered the aircraft off jacks on a work stand, damaging an engine cowl. They
used angle grinders to remove corrosion without covering up other areas… i.e.
metal shards sprayed all over exposed wiring, etc. 12
After a check at an overseas facility a plane was returning to Australia when the galley came
loose in flight because it had not been secured properly. The galley is a large structure weighing
upwards of 200kg.
Those guys hadn’t done it up and what was happening was in flight this galley
was going boom, boom, boom and it pulled all the bonding jumpers off — … So
it wasn’t bonded. It’s made of metal and it’s got 115 volts of power going to all
the ovens and the boilers and all of that sort of stuff. It was live and it delivered
a couple of electric shocks to one of the hosties when they grabbed a hold of
9
Interview, Former Airline Maintenance Inspector, 2014. Another inspector remarked, “Some Boeings
[were sent]… [offshore] to get painted and then the engineers started finding cracks and the [offshore
workers] were using steel scrapers instead of — what do you call it — Perspex because it’s quicker. Now,
the FAA ends up grounding 44 Boeings around the world”.
10
Australian Licensed Aircraft Engineers Association (ALAEA), 2014a, pp. 10ff; interview, former Quality
Inspector, 2014.
11
Survey respondent, #10350.
12
Survey respondent. #10595.
84
the handrail - boom. At the same time … I’m pretty sure it damaged all the
tops of the equipment at the same time. So it caused severe damage. 13
ALAEA claimed in a submission to a parliamentary inquiry 14 that after a D check carried out on a
B747 in Hong Kong, a number of the engine mounting bolts were found to have been installed
upside down. The ALAEA clarified in its verbal and supplementary documentary evidence that it
was in fact the washers on three of the engines that had been installed upside down, while a
witness representing the Civil Aviation Safety Authority (CASA) claimed that the problem was a
trivial one and affected only one bolt on one engine. The ALAEA argued in reply that the incident
had not been properly reported, and if it had been, an Airworthiness Directive would have
needed to be issued requiring new checks to be done on all the engine installations done by the
MRO to be checked. 15
On the one hand, it is hard to think of any component in the whole of mechanical engineering
which suffers more intense stresses than the bolts attaching an engine to a large passenger jet.
On the other hand, this was an area in which each of the rival parties had a legitimate claim to
speak with authority, and there is no way of determining objectively which of the two conflicting
perspectives to believe.
One reason for departures from standards appears to be a strong undersupply of qualified and
especially licensed supervisory personnel. According to ALAEA,16 a desirable ratio of supervision
in Australia is 1:2 – that is, one LAME supervising the work of 2 aircraft maintenance engineers
(AMEs). In Europe, on average, the ratio is estimated at 1:5.17 The International Civil Aviation
Organisation (ICAO) benchmark, which is based on representative observed practice across all
member nations, sets the ratio for a large passenger or cargo jet at 1:3. However, the ALAEA
claims that LAME/AME ratio in a Singaporean MRO, to which Qantas planes were being
offshored for heavy maintenance, was 1:11. In Hong Kong, it was found to be 1:8, and in the
Philippines 1:22.18 The supervision problems are often compounded by language difficulties:
You might have one LAME who’s overseeing 20 or more AMEs, some of who
have no English at all because I know, particularly in [name of MRO deleted]; I
had a lot of trouble communicating with guys. 19
Some informants suggested a systemic link between safety outcomes and national differences in
regulatory requirements. One maintenance inspector remarked that
If we were seeing a lot of unusual defects or defects that were unusually severe
in their extent we would go back and look at the previous check and nearly
always the previous check would’ve been done at a foreign MRO.
I’ve actually worked on the [de-identified] aircraft in our maintenance facilities
before. We used to do some of their engine maintenance and we found some
rather unnerving things. We found drills broken off inside fuselage [pins] and a
rivet head had basically been cut from the rivet and glued over the top of the
13
Ibid.
14
Australian Licensed Aircraft Engineers Association (ALAEA) 2014a, p.8.
15
Australian Licensed Aircraft Engineers Association (ALAEA) 2014b.
16
Australian Licensed Aircraft Engineers Association (ALAEA), 2007.
17
Personal e-mail communication, President and Vice President Air Engineers International, 7 June, 2014;
4 November, 2014.
18
Australian Licensed Aircraft Engineers Association (ALAEA), 2014, p. 8.
19
Interview, former Quality Inspector, 2014.
85
rivet hole. … So they X-rayed the panel and we found a drill bit stuck inside the
fuselage. … once again whether that was done by [de-identified] Airlines
maintenance itself, or whether it was done by an MRO that they used,
obviously we can’t find that out. 20
If, as has been suggested, observance of safety standards is linked to the local availability of
sufficiently qualified maintenance and supervisory staff, the impending global shortage of
aircraft engineers may see such examples multiply, with no country in the region, including
Australia, immune. Whilst the critical need is to address the skills gap, it will also be increasingly
important, in a global labour market, for governments to address the dilemma of overcoming
national jurisdictional boundaries in the interests of aviation safety. This will mean addressing
some of the regulatory issues outlined in the next section.
6.4 Jurisdictional issues and the need for effective regulatory oversight
As the supply chain for maintenance becomes longer and more international, so the problems of
oversight increase, well beyond the designed capacity of the present system and arguably well
beyond its capacity to adapt in its present structure. Unfortunately, all the evidence so far
suggests that the regulatory presence, and monitoring activity in general, have been declining
over recent years where Australian airlines are concerned.
As mentioned earlier, the first wave of Qantas offshoring involved numerous Qantas managers,
engineers, inspectors and licensed personnel in monitoring the contractors’ work practices. Our
admittedly limited evidence suggests that even at this time, CASA inspectors were thin on the
ground, and confined themselves to desktop audits rather than visiting the shop floor.21 As
argued in the next chapter, the auditing function appears to be shifting from actual practice
towards documentation of process – a trend already noted with concern by the International Air
Transport Association (IATA) in its 2013 Safety Report.22 and remarked upon by the ASRR23. It
also seems that in subsequent offshoring, fewer licensed personnel found themselves
performing inspecting and supervisory roles on these expeditions. Thus, more and more of the
burden of safety assurance has fallen on the airlines’ own quality inspectors and professional
engineers.
In saying this, we do not mean to play down the responsibility which the airline itself carries for
the safety of its own operations. Nor should it be forgotten that ultimate liability at law for any
harm coming to aircrew, customers or their belongings or consignments rests with the carrier.
However, as pointed out in Chapter 5, when a carrier is under severe competitive pressure it can
often be tempting to relegate this responsibility beyond the first rank of priorities, given the very
low statistical risk of a disaster. More to the point, once the number of outsourced providers
passes maybe half a dozen, strict periodic inspection of all the contract MROs, to say nothing of
their subcontractors and parts suppliers, quickly escalates to a substantial inspection load.
Equally, a provider who may have dozens or even hundreds of customers would find it a
substantial encumbrance to productivity if all of them had their own inspectors present in the
workshop at regular intervals. Given these factors, it seems inevitable that sooner or later
inspection must become a collective responsibility, and given the degree of public interest in the
20
Ibid.
21
Interviews, Airline Quality Manager, Airline Engineer, CASA inspector, Former CASA official, 2012-2014.
22
International Air Transport Association (IATA, 2014), p. 74.
23
Australian Government, 2014.
86
consequences, that part of that collective responsibility must be borne by national and
international regulators.
On the other hand, the real cause for concern may be not with those airlines which still attempt
to carry out their own inspections, but with those which leave it to trust and rely solely on the
regulator. In the view of one insider, it is not unusual for a contracting airline simply to rely on
the approvals of its own national aviation authority (NAA) and the NAA of the country where the
MRO vendor is domiciled, without doing any checking of its own on the ground.24 As the
evidence in this chapter has shown, such trust may well be fatally misplaced in today’s
regulatory environment.
Within Australia, CASA inspectors once visited the shop floor with some regularity, and would
inquire into actual real maintenance processes. Now, inspectors rarely do this, instead
conducting paper audits. Although according to the ASRR25 this is consistent with present “best
practice”, there is some concern about its use in the industry, as the following quotations attest.
The problem is that paper audits do not directly reach the workplace, where faults could lie that
were not picked up in the company’s safety management system.
We only look at paperwork now. We very rarely actually look at an aircraft to
see if the work’s done properly. Only look at the processes. If the paperwork’s
fine then if something goes wrong then you just blame the company.26
I think CASA could be so good for the industry, doing what they’re supposed to
do, which is getting out there, regulating and inspecting. You can’t find out
what’s wrong with a system if you don’t audit that system adequately. And
just opening the book up and making sure all the boxes are signed is not
adequate. That’s all they do, desk top audits. 27
When I started in the industry, … they spent the morning going through the job
records and poor procedures manual and that sort of stuff. The afternoon the
surveyors wandered the workshop and he’d come up to your bench and he’d
say: What are you doing there and you’d have to explain yourself, what you
were doing. You’d show him the data that you’re using, how you’re drawing
your parts out and it was actually a hands on assessment of the way things
were going. These days...28
CASA comes in to do an audit on me now and the surveyor will normally grab a
whole stack of files and things, he’ll come in here, he’ll stick his head in the
window and say I’m going to have lunch, come back afterwards and he’ll stick
his head in and say I’m going home. Then he’ll pop his head in the day after and
say: It’s all good, no major issues, a couple of little things, it will be in the
report.29
You know four weeks in advance or six weeks in advance when they’re going to
be here. There’s this charade that goes on around the place where we’ll put all
24
Interview, Qantas Engineer; Senior Maintenance Manager, 2012
25
26
27
Interview, GA LAME, 2009.
28
. Group interview, GA Employers, 2011.
29
Ibid.
87
this stuff in the back room and get rid of that and hide all this stuff, we’ve got a
CASA guy coming here. It’s just a joke.30
Previously CASA had field officers at just about every airport. There were three
surveyors based here at [de-identified] and they knew every engineer by name
and at least once a week they’d do a bit of a wander round, a quick look
through the hangars, talk to you about any problems you were having. That’s
all gone. 31
The 2014 Aviation Safety Regulation Review (ASRR) report,32 while generally upbeat about the
performance of the major airlines, was not reassuring about the effectiveness of CASA’s current
practices. It argued that while there is a worldwide shift in the nature of safety oversight and
inspection from direct inspection of workplace processes and systems, to one of auditing
workplaces’ safety management systems, CASA inspectors’ capabilities to perform these audits
is lacking – points we take up in the next chapter. While this view was expressed in relation to
the domestic sphere, we can only conclude that it applies equally or more to offshore
inspections.
The burgeoning offshore maintenance industry has left CASA with an enormous increase in its
potential monitoring load, and no recent government has shown any inclination to adjust its
resourcing to accommodate that increase. As in the case of airlines conducting their own
monitoring and due diligence, there is a strong argument that it needs to adopt radically new
approaches in order to meet user expectations within a context of growing fiscal austerity.
However, its room to move – or even its freedom to carry out its original remit – has been
constrained in recent years by developments in the framework of international law within which
it is bound to operate. More than CASA alone, it is a case of the international regulatory system
struggling to accommodate a radically new environment, which has exposed the vulnerabilities
that were inherent in it from the start. The next chapter looks in more detail at what that
international framework entails, and where it is currently failing.
6.5 Conclusion
Detailed evidence of a future shortfall of appropriately trained and licensed engineers in the
aviation industry will be presented in Chapter 10.One outcome is likely to be work
intensification. In this context, it will be critical to manage the tension between profit and
protection, through licensing and industrial relations regulatory regimes that can safeguard the
independence of engineers seeking to ensure. Another response to the shortfall may be to
reduce qualification and training times (indeed, the IATA foreshadowed this in 2009) 33 and to
allow certification work to leak to less qualified personnel. We need certainty that the industrial
relations, training and licensing regimes of the countries to which Australia off shores its
maintenance, adequately safeguard the capacity to perform the socially protective roles that are
at the heart of aviation safety. Only then can we rest easy about both present and future safety
performance in offshore maintenance regimes.
Safety performance in offshore maintenance facilities is, however, quite likely to fall off as a
result of the looming skills shortage, as airlines and MROs alike seek to maintain levels of
production and profits in face of personnel shortages. For all the reasons mentioned above, it is
30
Ibid.
31
Ibid.
32
Australian Government, 2014, pp 1, 28.
33
International Air Transport Association (IATA) (2009).
88
highly desirable that Australia should retain the capacity to perform its own heavy maintenance
on its own planes – including the emerging generation of twin aisled planes on the leading edge
of passenger aviation technology. However, to argue this is to encounter the cruel reality that
for the present it is very difficult, if not impossible, to compete economically with the large
facilities, centrally located in Asia and the Middle East, characterised by formidable economies
of scale. The challenge therefore becomes, how to retain the capacity to “reboot” Australia’s
heavy maintenance capability as the skills shortfall begins to bite, and to nurture and build on
the capacity that is already there. The first step, ensuring the integrity of the Australian licensing
system across all aviation sectors, is taken up in the next chapter.
89
90
Chapter 7 Regulation and Safety Oversight of
Offshore Maintenance
7.1 Introduction
On the surface, the quality of offshored maintenance is safeguarded by a highly comprehensive
and detailed international regulatory scheme. This scheme is based on a treaty (the Chicago
Convention), which has the force of international law, and flows down through Annexes and
Standards and Recommended Procedures (SARPs), to manuals which set the detail of how these
SARPs should be observed. In practice, however, this international scheme is a loose and largely
consensual one which contains no independent powers of enforcement and relies on the
cooperation of signatory nations for its observance. In this it reflects a key principle of
international law – that of national sovereignty. The result is that flexibility built into the
international regulatory model allows scope for considerable variations between member
nations in quality and consistency, at the same time as it effectively constrains the power of
individual nations to exercise quality control over maintenance outside their national borders.
While the International Civil Aviation Organisation (ICAO) regulatory scheme is central to the
international aviation safety system, the latter appears to be entering a period of “regulatory
reform” and quite significant change. It is not our task in this report to comprehensively explore
this change, but it can safely be said that there are potentially very powerful challenges to the
ICAO-based global aviation safety oversight system emerging. In particular, the International Air
Transport Association (IATA) has set up a new safety audit programme known as the IATA
Operational Safety Audit (IOSA), which promotes a different approach from that of ICAO.1
To return to a point made in the last chapter: there is no reason to believe that the standard of
maintenance performed outside Australia is uniformly or even predominantly poor. The problem
which needs to be addressed is simply this: we can be reasonably certain from evidence so far
that mistakes are made from time to time, and unsafe practices condoned, even in maintenance
repair organisations (MRO) which are normally considered to be highly reputable, and the
important thing is to find out when they happen, ensure that the consequences are attended to,
and exert some pressure on the provider to ensure that such unsatisfactory practices do not
recur.
This chapter argues that the existing approach to regulatory oversight is not up to such a task.
A committee of aviation experts recently reviewed Australia’s general approach to aviation
safety. The resulting report of the Aviation Safety Regulation Review (ASRR) argued that
internationally leading regulators employ what they call a “trust and verify” approach.2 It can be
argued that, in respect of the safety oversight of offshored maintenance, the Civil Aviation
Safety Authority’s (CASA) current approach trusts too much and verifies too little. It delegates
offshore too much responsibility for the safety oversight of offshored maintenance.
This chapter begins by setting out how the international scheme works, and within that context
explaining, and where necessary criticising, what often appears as the ineffectuality of
1
Hodgkinson. 2005
2
Australian Government, 2014.The term comes from a reference to policing adherence to arms control
treaties during the cold war – “doveryai no proveryai”, ironically, was a Russian proverb used by President
Reagan, meaning “trust but verify”. That is, to be sure people are playing by the rules you (or someone
you trust) have to go and have a look at what they are doing.
91
Australia’s response to the regulatory oversight challenge of global MRO. This is done in part by
contrasting Australia’s approach with that of the United States (US), which over the last seven
years has gone further than any other advanced Western nation in controlling the access of its
nationally registered carriers to the less satisfactory elements of the international industry.3 The
chapter concludes by examining certain findings of the 2014 Aviation Safety Regulation Review
report, which support suggestions for an improvement in the safety oversight of offshored
maintenance.
7.2 The international system of safety oversight
The international aviation safety oversight system is based in the Chicago Convention which was
signed in 1944, at a time when the Allies confidently looked forward to a post war period in
which air transport between nations could flourish free of the politically motivated restrictions
which had held back its pre-war development.4 Thus, Article 37 provides that:
Each contracting State undertakes to collaborate in securing the highest
practicable degree of uniformity in regulations, standards, procedures, and
organisation in relation to aircraft, personnel, airways and auxiliary services in
all matters in which such uniformity will facilitate and improve air navigation.
To this end the International Civil Aviation Organisation shall adopt and amend
from time to time, as may be necessary, international standards and
recommended practices and procedures… (emphasis added)
The standards and recommended practices (SARPs) of most relevance to aircraft maintenance
are “licensing of operating and mechanical personnel” (Annex 1), “airworthiness of aircraft”
(Annex 8), and “safe operations of aircraft” (Annex 6). It is these SARPs, in conjunction with the
recent Annex 19 (Safety Management), that constitute the substance of ICAO regulation with
regard to maintenance and associated licensing.5
Annex 1 defines each category as follows:
Standard: Any specification for physical characteristics, configuration, matériel,
performance, personnel or procedure, the uniform application of which is
recognised as necessary for the safety or regularity of international air
navigation and to which Contracting States will conform in accordance with the
Convention; in the event of impossibility of compliance, notification to the
Council is compulsory under Article 38.
Recommended Practice: Any specification for physical characteristics,
configuration, matériel, performance, personnel or procedure, the uniform
application of which is recognized as desirable in the interest of safety,
3
Baretto, 2002. Notably, while the US Federal Aviation Administration (FAA) runs its own international
regulatory review system, known as the International Aviation Safety Assessment (IASA), it is ICAO-based
insofar as it assesses the compliance of countries whose airlines fly into the US against ICAO standards.
4
To quote an example close to home, when full through services between England and Australia
commenced in 1935, the first two days of the outbound journey consisted of a brief flight from Croydon to
Paris, followed by two nights and a day on trains between Paris and Brindisi, because several of the
European powers would not permit British-registered aircraft to overfly or land on their territory. Hooper,
1985.
5
International Civil Aviation Organisation (ICAO), 2011a. Supporting material for these Annexes is
contained in International Civil Aviation Organisation (ICAO), 2008a/2013 and International Civil Aviation
Organisation (ICAO), 2013b.
92
Chapter 7 - Regulation and Safety Oversight of Offshore Maintenance
regularity or efficiency of international air navigation, and to which Contracting
States will endeavour to conform in accordance with the Convention.6
It will be noted that the standards are not mandatory, but a state which chooses to make
different regulations must inform the ICAO of this decision under Article 38. Indeed, the
standards could not be mandatory as well as compliant with a key principle of international law
– that of national sovereignty. Although the ICAO system is, in the words of one commentator, a
“watertight system” that “does not allow for a situation where States do not comply and do not
file differences”,7 in fact the origins of the ICAO Universal Safety Oversight Audit Program
(USOAP) lie in precisely that situation.
This is important in light of Article 33, which states that
Certificates of airworthiness and certificates of competency and licences issued
or rendered valid by the contracting State in which the aircraft is registered,
shall be recognized as valid by the other contracting States, provided that the
requirements under which such certificates or licences were issued or
rendered valid are equal to or above the minimum standards which may be
established from time to time pursuant to this Convention. (Article 33,
emphasis added)
There is an unresolved logical tension here. Article 31 specifies that a certificate of airworthiness
is “issued or rendered valid” by the state in which the aircraft is registered. Annex 8 underlines
this responsibility:
The State of Registry also has the responsibility to make certain that every
aircraft on its register is maintained in an airworthy condition throughout its
operational service life… Although methods of discharging the foregoing State
airworthiness responsibilities may vary, and in some cases, may involve the
transfer of certain tasks to authorised organisations or other States, such
arrangements do not relieve the State of Registry from its overall
responsibility.8
Yet, following offshored maintenance, a plane is certified as airworthy in the other country
according to that state’s own processes. The state of registry is obliged to accept the other
country’s procedures despite difficulties of verification posed by sovereignty. Annex 8 requires
that the state of registry must have an on-going inspection regime, and that this should not be
delegated to another state. Yet Article 33 not only allows but in normal circumstances arguably
requires reciprocal recognition arrangements which effectively permit the transfer to other
countries of certain functions of a national regulator – including safety oversight.9 This can be
read as effectively putting all contracting states on the same footing so far as the validity of their
certificates or licences goes, subject only to the proviso already cited, “that the requirements
under which such certificates or licences were issued or rendered valid are equal to or above the
minimum standards which may be established from time to time pursuant to this Convention”.
6
7
International Civil Aviation Organisation (ICAO), 2011a, Annex 1, Preamble, p. viii.
Kotaite, 1995, cited in Huang, 2009, p. 66.
8
International Civil Aviation Organisation (ICAO), 2010a, Annex 8, Part II, Chapter 4, “Continuing
Airworthiness of Aircraft, 4.2.3, State of Registry”. Emphasis added.
9
Jennison, 2013, p.335.
93
The mechanisms by which the ICAO standards are monitored and verified are obviously crucial
to the working of the system. While it can “bring infractions of the Convention to the notice of
the Contracting States and the Assembly”,10 there is not much else ICAO can do, as Barreto 11
points out,
The Convention does not provide for a safety compliance and enforcement
authority, and its effectiveness in guaranteeing aviation safety is based on the
assumption that each contracting State adheres to the organisation’s safety
standards.
Article 38 imposes an obligation on member states to declare differences if they do not comply
with ICAO standards. This created a major safety concern in the mid 1990s, as it became
apparent that some states were not observing standards, nor were they filing differences. Thus
in 1998 the ICAO established the Universal Safety Oversight Audit Program (USOAP), the aim of
which was to
Determine States’ capability for safety oversight by assessing the effective
implementation of the critical elements of a safety oversight system and the
status of States’ implementation of safety-relevant ICAO Standards and
Recommended Practices, associated procedures, guidance material and safetyrelated practices. 12
ICAO officials would conduct USOAP audits, following the signing of a Memorandum of
Understanding between ICAO and the audited state. This was taken as confirming the principle
of sovereignty, despite an element of compulsion or pressure on states to accept the audits.
Certain states pushed back on any suggestion that ICAO should “police” nation states’ safety
systems. Against this, Huang argues that a nation state’s obligations to enforce safety oversight
in its territory are obligations to all (erga omnes) that justify the role of just such a centralised
international institution as ICAO to enforce them. Others argue for “decentralised enforcement”,
in which states can act against a non-compliant state, even if they are not directly affected.13
According to Huang,14 however, Article 33 entails that certificates issued by non-compliant states
can be refused recognition by other contracting states. This is in accord with actual practice of,
for example, the Federal Aviation Administration (FAA) IOSA system,15 as well as the European
Aviation Safety Agency (EASA).
The first safety audits concentrated on the host government and regulator’s ability to implement
the SARPs contained in Annexes 1, 6 and 8. The first “round” of audits took place from 2000, and
by 2006 ICAO reported significant progress in the implementation of state corrective action
plans and a decline in non-implementation of the key elements of a safety oversight system. Yet
there were concerns about transparency – the initial proposals for the USAOP were for broad
publication of the results, yet this did not eventuate, with only general disclosure available on
the ICAO website.
Following the end of its initial series of audits around 2009, there were concerns about the
relative infrequency of audits. USOAP was accordingly “upgraded” and replaced by a continuous
10
Kotaite, 1995, in Huang, 2009, p. 66.
11
Baretto, 2002, p. 654.
12
ICAO Doc. 9735, AN960, in Huang, 2009, p. 68.
13
Ibid.
14
Ibid., p. 72.
15
IATA Operational Safety Audit. Jennison, 2013, p. 335.
94
monitoring approach (CMA), which seeks to gather information on an ongoing basis precisely
because of this problem of the gaps between audits.16 Australia was last audited in 2008.17 The
extent to which Australia has implemented the CMA is not known at time of writing, and no
mention of it could be found on a recent search of the CASA website.
Despite their limitations, the ICAO programs have identified “fundamental weaknesses in the
safety programs of many States, resulting in significant differences in safety standards around
the globe”.18 In its 2013 Safety Report, the ICAO put the average level of compliance in
implementing the “critical elements” of safety oversight at only 61% across all nations audited
(96% of its membership), though the average score for airworthiness oversight was somewhat
higher (if still not encouraging) at 73%.19 The “significant differences” identified have not
resulted in any amendment of the default requirement to treat all national licences and
certificates as equivalent.
To sum up, the international regulatory scheme is one in which the international body has no
substantive powers to act on its own initiative against even a serious breach of the SARPs, the
enforceability of the scheme depends on the willingness of individual nations to apply sanctions
(which themselves are of an all-or-nothing character), and the provisions can be overridden by
bilateral or multilateral agreements between individual member countries. Moreover, any
initiative to tighten up requirements can only be achieved through lengthy processes of
diplomacy.
The increasingly global nature of maintenance suggests a need for international institutions to
play a more active regulatory role. The lack of coercive powers at the level of the international
organisation increases the responsibility of each National Aviation Authority (NAA), the ability of
which to enforce the necessary standards and processes in another country is limited by the
principle of national sovereignty. As the international environment changes, it becomes
increasingly important to scrutinise the performance of CASA and the adequacy of its existing
policies and practices to cope with new imperatives and constraints.
7.3 Australian regulation of offshore maintenance
To protect Australians against the kinds of malpractice mentioned in the previous chapter, a
strong regulatory framework is necessary. How well does Australia’s regulatory framework
measure up? The framework of Australian international safety regulation is based on the ICAO
model, which, despite the emerging competition to the latter (mentioned in the introduction), is
the model to which Australia is committed by treaty and its own internal legislation.
Australia’s National Aviation Authority was a department of state until 1988, when an
independent Civil Aviation Authority (CAA - AU) was established within the Transport portfolio.
In 1994 CAA-AU was replaced by the present Civil Aviation Safety Authority (CASA), whose remit
is confined to safety-related regulation.20 The responsibilities of CASA include registering and
assuring the airworthiness of Australian aircraft, authorising organisations to carry out
maintenance, and flight crew and maintenance engineer licensing. This last-mentioned function
includes the accreditation of educational institutions and other organisations which train
16
. See International Civil Aviation Organisation (ICAO), 2010b, 2010c.
17
See International Civil Aviation Organisation (ICAO) 2008b.
19
International Civil Aviation Organisation (ICAO), 2013c, pp. 12-13
18
ibid., p. 3-4-1.
20
Innes and Watson, 2004, p.17; The ASRR (Australian Government, 2014, p. 23) agreed that it is
inappropriate for CASA to be engaged in industry policy.
95
maintenance personnel, and (until the advent of the reforms examined in the next chapter),
administering the final examinations known as the “CASA Basics”, as well as certifying that
candidates for a maintenance licence had adequate experience.. CASA operates through a
complex set of regulations, originally the Civil Aviation Regulations (CARs), but since 1998 a new
set of Civil Aviation Safety Regulations (CASRs) has been implemented. These flow down through
documents called Manual of Standards (MOS), while advice as to how to comply with the MOS is
contained in documents called Acceptable Means of Compliance (AMC), Guidance Material, and
Advisory Circulars.
The Civil Aviation Act (1998) 21requires that:
CASA shall perform its functions in a manner consistent with the obligations of
Australia under the Chicago Convention and any other agreement between
Australia and any other country or countries relating to the safety of air
navigation. (s.11)
Under Annex 19, the most recent addition to the ICAO SARPs, ICAO requires all signatory states
to have a “State Safety Program” (SSP), with specified components that take us beyond our
immediate concerns here.22 Again, this particular requirement gives a good deal of latitude –
“the acceptable level of safety performance shall be established by the State” [3-1], but each
State “shall establish and implement a safety oversight system in accordance with Appendix 1”.
Australia’s SSP reinforces that “CASA is responsible for the safety regulation of both civil air
operations in Australian territory and Australian aircraft operating outside Australian territory”.23
According to CASA’s own understanding
The Civil Aviation Act 1988 places responsibility on CASA to conduct the safety
regulation of civil air operations in Australian territory and the operation of
Australian aircraft outside Australian territory, by means that include
“developing effective enforcement strategies to secure compliance with
aviation safety standards” (CAA - AU 9(1)(d)).24
Yet these “enforcement strategies” include what amounts to automatic acceptance of other
countries’ standards, consistent with Article 33. This tradition has a history. For example, and
with respect to licensing under CAR 1988 Division 5, CASA has long treated licence approvals
given by an ICAO contracting state as being, to all intents and purposes, equivalent to those in
Australia. The relevant regulation reads as follows.
42ZN Certification of maintenance outside Australian territory
(1) The holder of the certificate of registration for an Australian aircraft on
which maintenance has been carried out outside Australian territory must not
fly the aircraft, and must ensure the aircraft is not flown, if each of the
following requirements is not satisfied:
(a) the completion of the maintenance has been certified by:
21
Australia, Civil Aviation Amendment Act 1998.
22
International Civil Aviation Organisation (ICAO), 2013a. Annex 19, Safety Management, has applied from
November 2013.
23
Australian Government (2012).
24
Civil Aviation Safety Authority (CASA) (2013b), p. 2-1.
96
(i) a person who would have been permitted by regulation 42ZC to
carry out the maintenance if the aircraft had been in Australia; or
(ii) if the maintenance was carried out in a Contracting State — a
person who would be permitted under the law of the Contracting
State to certify the completion of the maintenance if the aircraft were
registered in the Contracting State;
The effect of (a) (ii) is to make the quality of Australian aircraft maintenance hostage to the
training, licensing and approval processes of another country. While it is noted that this
regulation is a Civil Aviation Regulation (CAR 1988), and has been or soon will be superseded by
the Civil Aviation Safety Regulations (in particular, CASR 1998 part 145), CAR 42 ZN does give a
flavour of past approaches to international safety regulation. It appears partially to shift
responsibility for the regulation of offshored MROs to the airline, as well as to the NAA of the
MRO’s host country. This is consistent with the following communication from CASA.
The introduction of Part 42 of CASR establishes that a registered operator is
responsible for the continuing airworthiness of an aircraft used for Regular
Public Transport (RPT) as described under CAR 206(1)(c). Further Part 42 of the
CASR has set up legislative requirements under clause 42.295 of Subpart 42 D Maintenance which states that all aircraft involved in RPT Operations must be
maintained by a Maintenance Organisation that is approved by CASA under
Part 145 of CASR.
All offshore maintenance work for aircraft conducting RPT operations is
governed under the requirements in Parts 42 and 145 of CASR. Any offshore
organisation conducting maintenance work for an RPT aircraft has to go
through an identical process as applicable for a domestically located
organisation.25
Recent tendencies are to treat the regulation of offshored maintenance the same as onshore
maintenance, to the extent that “offshore” has no meaning since the “regulatory space” is
identical.26 It is unclear whether this means that overseas approvals would need to be granted
by CASA on the advice of its own inspectors following inspection, as is the case for a domestic
MRO – or whether an “exchange” of approvals would suffice. In fact CASA has issued a number
of similar approvals in the past (under CAR 30, and recently, CASR Part 145). Ongoing supervision
is another issue, required by Annex 8. Thus, in the earlier days of maintenance offshoring by
Qantas, CASA sent its own inspectors to supervise the work of the overseas shops, though
Qantas inspectors who were present at the time question the rigour of that inspection:
The {Australian Airline, de-identified] auditor when he was there said he saw
the CASA auditors from a distance and they were taken nowhere near the
{Airline’s] aircraft in that hangar during the CASA’s audit. …The chief CASA
inspector for that region, in charge of that region, became aware and read that
{Australian Airline, de-identified] audit report, but still chose not to go back and
have another look at the facility until there was a media story on an escape
path lighting that had been stapled together to make it work… Well, I mean in
all of the times that I was away I only ever saw, or knew of and essentially
didn’t really see CASA at one site and there apparently were guys there, I saw
25
ibid.; e-mail communication from CASA to one of the authors, 27 November, 2013..
26
Cox, 2015.
97
some gentlemen walking around, never spoke to them. They did a general
walk-around and then disappeared and that’s the only time that I ever saw any
input from CASA at any of these MROs.27
In these cases, CASA had at least the potential authority to withdraw Part 145 approval or (as it
was at the time, approval under CAR30) or more broadly, under the “equal to or above the
minimum standards” provision of Article 33, had it become aware of a particularly grave breach
of minimum standards. However, even this last line of redress is removed when reciprocal
approval takes place under the terms of a Bilateral Aviation Safety Agreement (BASA) negotiated
between Australia and another country. In such a case, the intent of the Chicago Convention is
overruled by the specific provisions of the bilateral agreement, generally removing all scope for
Australia to withdraw an approval – since the approval process has been delegated to the NAA
of another country. (The same section of the Act which obliges CASA to regulate “consistent[ly]
with the obligations of Australia under the Chicago Convention” also requires it to comply with
“any other agreement between Australia and any other country or countries relating to the
safety of air navigation”.) The 2013 Technical Agreement (TA) between Australia and Singapore
illustrates the scope of such agreements and the absence of any escape clause even in the event
of demonstrated unsafe practice:
By signing the TA, CASA acknowledges that maintenance organisations,
approved in accordance with SAR 145 and qualifying under the terms of the TA
are considered equivalent to an Australian AMO approved under the Part
145.28
Since June 2005 Australia has also entered into a BASA with the US and a Memorandum of
Understanding on airworthiness certification with China, and was expected to complete the
same process with Canada and Hong Kong by the end of 2013. By contrast, the European Union
at the time pronounced itself “unable to move” on a bilateral arrangement with Australia on
safety until approval had been provided by the European Commission.29 This failure to proceed
has placed Australia at a considerable disadvantage because, as mentioned in the Chapter 5, it
has blocked European recognition of Australian aircraft maintenance engineers’ (AME)
qualifications, and possibly European Part 145 approval of Australian maintenance providers.
This example raises an increasingly prevalent issue of Realpolitik: for countries like Australia
which have very limited global market power, and whose standards of training and licensing may
not be widely understood outside its region, bilateral agreements are fast becoming a de-facto
prerequisite for the mutual recognition of qualifications which would allow Australian AMEs to
retain the currency of their skills while demand in Australia remains in a slump. More generally,
while Australia feels constrained to remain within the spirit of the Article 33 provisions, larger
nations whose trade and labour markets will be important to the survival of an Australian MRO
industry are in a position to hold out on their supposed obligation to offer mutual recognition
unless it can be negotiated bilaterally, with the inevitable trade-offs. And to be fair, CASA is far
from the only regulator going down this path. Even the US, despite its current very stringent
requirements which will be discussed below, is moving in this direction, which can be presumed
to be the preferred position of the FAA in the absence of Congressional force majeure:
27
Interview, former Airline Quality Inspector, 2014.
28
Civil Aviation Safety Authority (CASA), 2015d. SAR - Singapore Aviation Regulation; in this case covering
Singaporean AMOs - Approved maintenance organisation.
29
Civil Aviation Safety Authority (CASA), 2013a, p. 57.
98
Section 145.1053(b) …[will]… allow the FAA to certify a repair station outside
the US based on a certification from an authority acceptable to the FAA. This
change would allow the FAA to make the finding based on a recommendation
from a national aviation authority, EASA, or any other EASA-like entity that
may be created in the future.30
Yet there are signs that the attempt to reduce oversight duplication through BASAs and mutual
recognition agreements has run into trouble. A recent report by the US Office Office of Inspector
General (OIG) has criticised FAA for not subjecting certain European MROs to a sufficiently
rigorous degree of auditing before granting recognition of their host countries’ NAAs’ abilities to
perform adequate safety oversight. 31
7.4 Pushing the limits in both directions: the US experience
In this context it is instructive to look at the US as a case study of a nation which, despite being
internationally known as a fervent advocate of deregulation, itself chose ultimately to move in
the opposite direction to the global tide of liberalisation when it came to the safety oversight of
offshored maintenance. The US case indicates the latitude which still exists within the ICAO
framework for a country with sufficient resources and market power to impose its will on the
globalisation process for maintenance, to the point where it at least temporarily brought the
whole process of offshoring from that country to a sudden halt.
Two significant differences exist in this context between Australia and America, one of them
obvious, the other perhaps less commonly recognised. The obvious one is America’s enormous
power in all areas of the global aviation market, both as a seller and as a purchaser. The less
commonly known difference is that the FAA is subject to much more rigorous oversight by the
political process than is Australia’s CASA. It is continuously accountable to three overseeing
agencies: the Government Accountability Office (GAO), a body whose remit of reviewing the
effectiveness of all government agencies is broadly comparable to the Efficiency Audit function
of the Australian National Audit Office; the Office of the Inspector-General (OIG) within the
Transportation Department; and the National Transportation Safety Bureau (NTSB), which sits
above the regulator rather than alongside it as the Australian Transport Safety bureau (ATSB)
does in Australia. Resting over and above these public service agencies, the House of
Representatives has a standing Subcommittee on Aviation. Together these have the effect of
leaving the FAA far more closely scrutinised, and far more often in the public eye, than CASA
which has to report only to Estimates Committees, the Auditor-General, the very occasional
parliamentary committee inquiry, and portfolio Ministers who in recent years (with the possible
exception of the current one) have been largely content to leave it to its own devices.32
A third characteristic which distinguishes America is that as the first mover among industrialised
nations in large-scale outsourcing and offshoring of maintenance, it had an early and painful
experience of the consequences of laissez-faire which later adopters like Australia have largely
been able to avoid. The most recent trend toward tighter regulation can be seen as a belated
reaction to some highly visible disasters with loss of life in which maintenance was a factor, and
which have figured prominently in the media. Over that period there has been a degree of
political mobilisation against offshoring, not only because of the “exporting jobs” argument, but
30
Federal Aviation Administration - United States (FAA), 2012a.
32
Australian Government, 2014, pp. 52-56.
31
Aviation Daily, 2015. Interestingly, one of the main reasons for OIG’s concern was the insufficiently high
level of inspector training in the European countries.
99
because of the safety and regulatory issues. The most striking demonstration of this growing
public concern was the emergence of an improbable cross-class Coalition to Legislate Aircraft
Maintenance Outsourcing Reform (CLAMOR), in which businesspeople with an interest in safely
arriving at their destination joined forces with unions seeking to save their members’ jobs.
During the 1990s, an explosive growth took place in heavy aircraft maintenance offshoring from
the US, and this arguably exceeded the capacities of the regulatory regime, because so much US
maintenance had previously been taking place in locations where the FAA had deployed fewer
resources, or in “uncertificated” shops that largely escaped scrutiny by the FAA. The sheer
multiplicity of small shops also stretched regulatory and inspection resources. Where once
airlines may have maintained a limited number of large centralised repair facilities, the FAA now
had to deal with a myriad of repair stations involved in complex and ever-shifting webs of
contracting and subcontracting with different airlines. Thus scrutiny of offshore MROs became
more logistically challenging.
A particular problem that arose as a consequence of the overstretched regulatory apparatus was
offshoring to uncertificated shops, of which there were as many as 1400 in 2005 according to a
report by the OIG.33 Unlike certified repair stations, non-certified repairers were not required to
implement quality control systems, designated supervisors and inspectors, or training. There
were no restrictions on the scope of work they could perform, and they were not subject to
regular inspection. Six of the ten non-certificated facilities reviewed had not been inspected by
the FAA, nor had 104 foreign non-certificated repairers identified as performing maintenance for
three carriers in 2003-4. In effect, non-certificated repairers largely escaped regulatory
oversight.
Over the decades since deregulation, the FAA accumulated a long history of critical reviews from
its three overseeing agencies, relating to issues such as regulation of airlines’ use of ageing
aircraft, high rates of safety incidents in the first years of new low cost carriers (LCC) airlines,
failure to properly implement risk analysis procedures, and misallocation of its inspectorate
resources which in any case had been overwhelmed by the growth in numbers of workstations,
low-cost and regional carriers, and uncertificated shops. In 2008, the OIG released another audit,
Air Carriers’ Outsourcing of Aircraft Maintenance, which noted that nine major carriers were
outsourcing over 70% of jetliner overhauls (25% going to foreign repair shops).34 The FAA was
found to lack comprehensive data on the extent and location of outsourced maintenance, and
the definition of “substantial maintenance” did not include all critical component repairs.
Neither did the FAA have a policy scheduling inspectors’ visits to maintenance providers. The
audit found oversight failures at all levels – the regulator, the operator and the repairer – leading
to the use of untrained mechanics, lack of required tools, and unsafe storage of aircraft parts.
Throughout this period of growing public and governmental concern, the FAA’s inclination was
to leave the responsibility with the carriers. Indeed, this reaction was highly understandable
given the minimal likelihood of its ever receiving sufficient resources to carry out the inspection
load required to satisfy all the legitimate complaints. What forced change was the political
reaction to the 9/11 atrocity and the fears it fuelled of terrorist infiltration in offshore
maintenance facilities. In response, Congress legislated to tighten up the regulatory and
supervisory practices of both the FAA and the increasingly influential Transportation Safety
Administration (TSA), which is responsible for aviation security. Starting with the 9/11
Commission Act of 2007, Congress effectively prevented the FAA from granting new
33
Office of the Inspector General - United States (OIG), 2005, p.6.
34
Office of Inspector General - United States (OIG), 2008.
100
certifications. New rules mandated by the FAA Modernization and Reform Act 2012 required it
to regulate for all “covered” maintenance work to be performed by certified repair stations by
2015, establish a safety assessment system for all part 145 stations, and inspect them annually.
Subsequently, the FAA announced new rules requiring all airlines to develop policies and
procedures for contract maintenance acceptable to the FAA, include them in their maintenance
manuals, provide the FAA with a list of all persons contracted to undertake maintenance, and
maintain surveillance of contract maintenance providers to ensure they complied with the
carrier’s maintenance program.35
The result was a massive burden both on the airlines and on the FAA, particularly as there does
not appear to have been any corresponding willingness on the part of Congress to fund the
necessary increase in its inspection and auditing capacity. Thus, whether or not this had been
the intention, the US went overnight from one extreme of the regulatory spectrum to the other
– from virtual open slather to a regulatory net so tightly stretched that it brought all new
offshoring to a sudden halt. It was not until the beginning of 2014 that the first new certification
was granted to an overseas shop, and the few accounts which have come into the public domain
suggest that very little progress has been made, or is likely to be, in making up the backlog.
On the positive side, the sudden change of policy did achieve a useful industry policy outcome,
even though this does not appear to have been a major concern of Congress. As early as March
2013, a survey by the Oliver Wyman consulting group found that over 30% of respondents who
currently outsourced their maintenance would be willing to bring it back to the US even if it
entailed a cost penalty of 6-15%.36 In the event, that sacrifice appears to have proved
unnecessary, as the devastation of manufacturing employment which followed the global
financial crisis (GFC) in America has driven wages down so far that the labour costs of carrying
out heavy maintenance at home are now possibly as low as, or even lower than, what it costs in
the most popular offshore maintenance destination countries. As a result, an apparently
vigorous new maintenance and associated sector is growing up, particularly in the southern
States which were hit especially hard by the GFC, where $46,000 a year is considered a good
wage for a fully qualified Airframe and Powerplant (roughly the American equivalent of a
licensed aircraft maintenance engineer (LAME)) licence holder.37 Simultaneously, the shortage of
skills which had begun to emerge in the main source countries increased the attractiveness of
the large pool of suitably skilled labour which was either seeking work or on its way up through
the training system in America. While the ICAO had judged in 2010 that North America was the
only region in the world training a substantial excess of maintenance personnel,38 by the time of
the 2013 survey many respondents were indicating that their main reason for not bringing more
maintenance back on shore was a lack of skilled labour.39 Just as tellingly, the major Hong Kong
provider of contract maintenance to the global market found it necessary to buy up one of the
large American MROs in 2014 as the only available means of getting the capacity to handle the
growing world demand.40
It is understandable that Australians should look wistfully at this unintended success story of oldfashioned protectionism. However, realism suggests that the result would be much less likely to
35
Quinlan, Hampson Gregson, 2013.
36
37
Chandler, 2014.
38
ICAO, 2010b, p.46
39
40
AviationPros, 2013.
101
have come about without a degree of wage compression which few Australians likely to be in
line for such work would willingly countenance — or indeed, without the patriotism factor which
motivated so many American customers to contemplate paying a premium for local work, and
which Australian airlines are unlikely to share (though one must remember that this willingness
was probably also due to considerations like supply chain security and the ability to form closer
working relationships with providers). What is more questionable is whether the American
approach would be effective or even feasible in its primary function of safety regulation in
Australia. Even the FAA with its comparatively enormous budget, strong support from higher
levels in the bureaucracy for taking an activist approach, and culture of willingness to take on
and proceed against non-compliant airlines, was unable to keep pace with the need for new
inspections. It seems likely to remain so even if the legislation remains in place unchanged.
In fact, the recent mid-term elections which saw Republican majorities elected in both houses of
Congress have been followed by moves to rescind or seriously water down the 2012 legislation.
Perhaps surprisingly, some of the most intense lobbying is coming from the Aeronautical Repair
Stations Association (ARSA), which might have been expected to support their continuation as
working to the benefit of its members. Significantly, one reason it has given for supporting
repeal is that the strict control on offshore MROs has put the BASA with Europe at risk and
thereby hindered EASA approval of its members.41
The US reform program has not been in operation for long enough, and its survival is not
sufficiently guaranteed, for any clear lessons to be drawn from it. Certainly the impression in the
short term is that rather than leading to a sustained scheme of adequate regulatory oversight,
the sudden introduction of the new requirements simply closed the door on any new offshore
MRO providers who were not already tied in by contracts with US airlines, while the
requirement to discontinue the use of uncertificated shops by 2015 would probably have
required the cancellation of many existing ones. That alone casts some doubt on the commercial
or political feasibility of the scheme beyond the end of 2015. At the same time, the degree of
public and Congressional enthusiasm for remedying the current situation of effective laissezfaire was not enough to guarantee the FAA the funding which would have been needed to
implement the remedy effectively. One proposal which was aired was that the full costs of
increased inspection be borne by the outsourcing airlines,42 something which would certainly
have altered the economics of offshoring by eliminating much of its (albeit diminishing) price
advantage. However, there is no indication that the authorities were ever willing to take up this
suggestion. In Australia, however, the much lower level of offshore contracting would make the
task of inspection a lot more manageable and perhaps affordable for Australia, particularly if the
airlines were forced to cover the full costs of increased inspection, which would exceed those of
CASA’s current cost-recovery program.
In 2015, there were 38 offshore MROs included on the CASA website as having been certified by
under CASR Part 145. There were 13 airline subsidiaries, 7 OEMs and 18 MROs. Of the latter,
there was a mix of line, aircraft on the ground (AOG) and heavy maintenance providers, working
across aircraft sizes, on- and off-wing, performing A to D checks, engines, engineering and
modifications. 11 were linked to each other or to original equipment manufacturers (OEM) or
airlines via joint ventures, or in subsidiary or sub-contract relations. The three main groupings,
with some inter-connections were SIA/HAESL, HAECO and ST/SASCO/STARCO. The websites of
several identified a range of further subsidiaries in various parts of Asia and the US. Most had
EASA certification, and presumably they would therefore also have had FAA recognition under
41
This is the argument of Daniel Fisher, Vice President Legislative Affairs, ARSA. Fisher, 2014.
42
Transport Workers Union (TWU), 2012.
102
BASAs with the US, although the US has recently had cause to re-examine some of its recent
mutual recognition arrangements. In 2014 one had surrendered its EASA licence.
Some aspects of the 2012 regulations appear to lend themselves to adoption in Australia within
the present regulatory framework and directions, and would produce benefits in terms of
transparency and possibly consumer confidence, besides facilitating the enforcement of current
regulatory requirements. We refer in particular to the requirement for carriers to provide the
regulator with details of the MROs with which they have signed contracts for maintenance, and
possibly for other types of outsourced work, and also with details of the work performed
offshore. Some of this information is already public knowledge, the reports could be generated
easily from existing internal records, and so long as the reporting was not required to go into too
much detail, it is hard to see any reasonable argument for keeping it out of the public domain on
grounds of commercial confidentiality. Similarly, it would seem reasonable and not especially
onerous to require carriers to document the safeguards they apply to contract maintenance,
incorporate them into their manuals, and include this documentation as part of their safety
management system (SMS) accreditation, even if the details do not pass wholly into the public
domain. Certainly it can and should be a requirement for approval of an SMS that it make
adequate provision for safety management of the supply chain, something which is
foreshadowed in the draft IOSA standard for SMS currently under development. It will probably
be worth monitoring the US experience with such requirements to see whether any problems
arise.
7.5 Is there a solution?
Now that carriers are faced with a choice between an increasingly large range of new businesses
competing for different aspects of their maintenance work, it is important that they have
accurate means of distinguishing the good providers from the bad ones. Provided this can be
done, the market in many cases will exercise the most effective sanction on careless or
unscrupulous providers, and where market incentives fail, public disclosure will often achieve
the same effect.
CASR Part 42 is designed to ensure that the air operator certificate (AOC) holder, who must be
the registered operator of the aircraft, cannot avoid or delegate responsibility for its
airworthiness. Approval as a continuing airworthiness management organisation (CAMO)
requires demonstration of management structures and employee qualification standards that
will safeguard airworthiness standards. Shifting responsibility to the aircraft operator is thus not
the pass-the-parcel exercise it might appear, providing the regulator is prepared to act decisively
and prosecute when breaches occur. Even though the culpability for a safety breach of the
offshore MRO might be transparent, legal redress is generally more assured and less subject to
the vagaries of international litigation if there is someone in the same jurisdiction to proceed
against.
Equally, a logical justification for the growing presence of OEMs in the world MRO market is the
need to minimise their liability and to control any damage to their reputation by keeping control
of the airworthiness of their products beyond the point of sale. There is no question that an
oligopsonistic global corporation can be a much more effective regulator (albeit not necessarily a
fairer one) than any one government’s instrumentalities. That very reputational element exerts
pressure on the OEMs to be more careful in the choice and supervision of their suppliers and
subcontractors. Hence the emergence of Nadcap as an industry-managed approach to applying
industry and government technical expertise in setting, applying and auditing accreditation
103
standards for components along the tiers of the aerospace manufacturing supply chain.43 The
logical extension is the growing move of OEMs, into the tight control over maintenance of their
products, through the careful choice of contractors for tied afterservice.
Despite these real incentives to behave responsibly, there is still a need for some kind of
definitive sanction against the most unsatisfactory providers and against the carriers who
knowingly continue to use their services. This will become especially important if (as we forecast
in Chapter 9) worldwide capacity shortages make it difficult for carriers to be as discriminating in
their choice of provider as they ought to be. This is where regulatory powers, as opposed to
simple information exchange and disclosure, have their part to play.
The difficulties we have outlined with the regulation of offshore maintenance mainly affect the
practicality and legality of directly monitoring practice in the source countries. Since the
opportunity to intervene on that level is restricted under international law and in many cases
has already been traded away in bilateral agreements, it is logical to seek opportunities for more
effective regulation at the international level. However, as things stand, this is not really
practical either, for reasons set out below.
Other possibilities exist for a non-governmental auditing process which could provide a margin
of reassurance over and above the ICAO SARPs, which are acknowledged in Article 33 to be
minimum standards. Only recently the Executive Director of ARSA claimed that
Corporate flight departments often institute much higher standards than those
required by parts 43 (maintenance), 91 (general operating), and 145 (repair
stations). Ensuring continued airworthiness for businesses and executives
cannot be based on minimum standards; there is too much at risk.44
Demands such as these for a premium standard could create the opportunity for an
independent, apparently unbiased standards-setting process to complement or eventually to
challenge the current ICAO-based regime. Such accreditation could equally serve the needs of
airlines seeking a new MRO, or of ordinary non-executive consumers and consumer
organisations, if the ICAO regime becomes less effective for the reasons canvassed in this
chapter. The International Standards Organisation (ISO) is the obvious model for such a process,
and ideally these consumer-focused bodies would be looking for compliance with an ISO
standard.45
Indeed a suite of aviation and aerospace-specific standards have already been developed out of
ISO9001. Of particular relevance is Aerospace Standard S9110A, setting out a Quality
Management System for aviation management organisations (the US MROs), specifically for Part
145 organisations. Organisations certified to AS9110A are also certified to ISO 9001. The purpose
is to assist in demonstrating consistent capacity to meet both customer requirements and
statutory and regulatory standards through a program of continual improvement in quality
management systems with a focus on safety, training, and the use of approved parts. Whilst
voluntary, AS9110A certification is already a selling-point on the websites of some MROs, both in
Australia and offshore. The use of such providers by AOC holders could serve as a selling point
on their websites. More strongly, it could weigh strongly with the regulator during the audit
process as one indicator of a compliant quality safety management system.
43
Performance Review Institute (PRI), 2015).
44
Macleod, 2014.
45
As discussed below, the ASRR found several violations of the ISO standards around MRO inspection in
Australia, and until the training of CASA inspectors is improved, it is likely these would replicate
themselves in an international environment.
104
7.6 Domestic regulatory options
Australia is passing through something of a crisis of direction with regard to domestic
enforcement, which limits international oversight options, and predisposes towards BASAs. The
focus of regulation globally is shifting from the monitoring and enforcement of individual rules
and processes to the assessment and accreditation of safety management systems (SMS), and if
Australia’s capacity to keep up with the changes in its domestic sphere is in doubt, more so is its
capacity to conduct proper inspections of overseas facilities. The ASRR describes the transition:
...aviation regulation globally is moving towards a performance-based model,
and away from a compliance-based and procedural approach …
New methods of safety oversight are being introduced for high-risk sectors.
Regulators are having to step back from prescriptive hands-on inspection
processes and apply systems approaches to safety oversight.46
In principle, a systems approach to safety regulation is logically compelling and should lead over
time to a reduction in the regulatory burden. By definition, a system is made up of a
configuration of beliefs, values, rules, procedures, expectations and conventions which are
mutually reinforcing, and consequently should adapt to changing circumstances and self-correct
except when severely disrupted. Once the system is in place and operating, it should be able to
look after itself, and its beneficiaries, for extended periods without the need for close
monitoring.
However, assessing and accrediting a safety system is a considerably more complicated and skillintensive job than simply verifying a set of rules and processes on the assumption that
compliance will occur. It is necessary to make an informed judgement about something that
amounts to a living entity, and making predictions about its future behaviour in a dynamic
environment. Above all, the system that matters is the system which actually operates, rather
than the system described on paper. In a systems context it is more important than ever to be
aware of Argyris and Schön’s47 distinction between the espoused theory and the theory-in-use.
What this means is that it is more inappropriate than ever to evaluate such a system on the basis
of the paperwork alone. What is needed is for someone with a good knowledge of organisational
behaviour to be on the ground for extended periods and observe patiently how the system
works in practice. Unfortunately, it seems to be commonly assumed that SMS-based regulation
saves time because it is possible to go through the paperwork once, at the beginning, sign off on
it and work thereafter on the assumption that things will look after themselves. We have noted
the problems already caused by paper-based auditing of offshore MROs, and any systemsfocused approach is bound to fail if the same precedent continues to be followed.
The bad news for CASA is that the SMS concept is going to make its job even harder than it
already is. To quote the ASRR once more:
Performance-based rules and the application of SMS, along with risk-based
surveillance concepts, require a change in how safety agencies work. These
changes bring challenges, placing more responsibility on regulated
organisations and changing how regulators conduct oversight.48
46
Australian Government, 2014, pp. 28, 58.
47
Argyris and Schön, 1996, p.13.
48
Australian Government, 2014, p. 57.
105
In other words, a system approach is going to involve considerably more discretion and
considerably more fine, context-based judgement, which needs to be supported by a deep
knowledge of organisational science and a diverse range of experience in actual organisations,
other than just the public service. Such an approach faces problems of implementation on its
own soil. The ASRR found that the existing relation between CASA and the industry is
adversarial, and not appropriate to an advanced nation like Australia, and it argued that CASA
and the industry therefore need to build a “collaborative” relationship. The ASRR endorsed
numerous representations from the industry to the effect that CASA’s approach to enforcement
had been high-handed and peremptory, and not in accord with relevant ISO standards. The
Government in its response supported some form of customer-focus training and better
arrangements for consultation and early warning.49
Like many Commonwealth agencies in recent years, CASA has suffered a skills drain with little or
no replenishment. As the ASRR pointed out:
… over the past 20 years, the availability of military expertise has diminished as
governments reduced armed forces and changed retirement policies. Many GA
schools closed due to increasing costs of GA flying. The result is global concern
about the diminishing availability of trained, capable and experienced pilots
and engineers. The shortage of expertise, along with a growing air transport
sector, is leading to challenges in filling critical safety oversight positions.50
As a result of that skills drain, it now finds itself short of critical auditing skills, a point picked up
by the 2008 USOAP audit as one of the major failings in the Australian National Safety System.
The ASRR echoed this finding, noting that:
… some inspectors lack adequate knowledge and understanding of the sector
they are regulating to ensure correct and consistent regulatory decisions.
Interviews with industry representatives and CASA staff indicated that
adequate audit training is not provided.51
The experience and knowledge of auditors was found to need upgrading through CASA’s internal
training. In this, the Aviation Safety Regulation Review echoed findings of the ICAO 2008 USOAP
– that Australia needed to upgrade its ability to retain technical expertise within CASA.52
If CASA has a skills problem already, then moving to a system approach will show up those
deficiencies far more starkly. Put otherwise, making this approach work will require a large
investment, both in attracting and recruiting the right people, and in giving them a rigorous
training in relevant auditing skills.
Such a lack of specialised expertise, and the lack of self-confidence it engenders, could go some
way towards explaining the agency’s hard-line and adversarial approach to its regulatory
responsibilities in some contexts, as well as its apparent diffidence when it comes to dealing
with safety issues that arise in the major airlines. Moreover, the appropriate approach to
regulating the relatively sophisticated aviation industry in Australia may not be the same one
49
Australian Government, 2014, p.77. This would be in accord with ISO19011 which specifically suggests
that, when a fault is found, the inspecting officer can exercise “discretion” (p. 69) and if it is not too
severe, can issue a “requests for corrective action” before “graduating” to a “non-conformance” notice.
50
Ibid., p. 55.
51
ibid, p. 57, 79.
52
ICAO, 2008b, p. 13.
106
which is needed when dealing with some of the less well developed safety cultures in nations
where several of the offshore MROs are located. In the words of the ASRR:
A firm, hard-line regulatory stance may be the most effective approach in
countries where the aviation industry is relatively new and has a degree of
immaturity. In these countries the rules must be more prescriptive and the
regulator must provide tighter oversight and be more diligent in ensuring rules
are followed. Aviation in Australia is advanced and the safety record is good.
The aviation community is generally at the forefront of new advancements and
safety thinking.53
The other problem which should be more or less self-evident is that this kind of auditing is
feasible if carried out on a small number of entities in one’s own country, but a great deal more
difficult when it comes to companies with networks of sub-contractors, located in different
continents, speaking different languages and with disparate national cultures. In practice, a
general move to system-based regulation will leave Australia more dependent than before on
the conscientiousness and quality of assessment applied by overseas regulators. It seems
reasonable to assume that in countries where regulation has hitherto been lax, system-based
regulation will quickly degenerate into even more of a formality. The only thing which might
mitigate this risk is the development of detailed protocols for system accreditation, and a
determination to enforce them.
Hence we can only conclude that where offshore maintenance is concerned, the existing Part
145 approval process has lost much of its effectiveness in protecting the travelling public against
poor practices, and can no longer be expected to bear the main burden of guaranteeing crew
and passenger safety. Failing an effective regulatory shield, informed choice – market forces
based on good information – may be the only effective substitute. 54
To say that the international regulatory apparatus casts doubt, rightly or wrongly, over the
safety of any given maintenance operation performed outside Australia is not the same thing as
saying it is unsafe. There is no question that many offshore MROs are world-class, producing a
very fine product. However, we also know that some have in the past displayed some very poor
practices indeed.
It can only be presumed that the airlines do some due diligence before letting out a
maintenance contract. In any event, the travelling public does not have access to the
information that lies behind this due diligence (since it is treated as commercial-in-confidence),
and there is no MRO rating agency or TripAdvisor to inform their choices about which airlines
are safest to fly with. They would at least have the possibility of carrying out their own consumer
research if only carriers were required by law to disclose where their maintenance is done, as is
currently mandatory in the US. But no moves have yet been taken to impose such a requirement
in Australia, and the ASRR did not consider the option.
A further approach is one based on international collaboration and consultation. Whilst the
impact of such work is likely to be slow, and to depend on voluntary cooperation, its importance
in diffusing agreed standards should not be underestimated. The Australian Government has in
the past commissioned its relevant Industry Skills Council, Manufacturing Skills Australia, to
undertake intergovernmental and industry level work in the Asia-Pacific region, in order to
53
107
develop comparable engineering and manufacturing skills standards and specify training needs.
Such work is important and should continue to be undertaken with renewed energy by the new
aviation Industry Reference Committee and its Skills Service Organisation, when they begin work
in 2015.
Nevertheless, consultation is not a substitute for regulatory oversight, and until there is
assurance of international comparability of standards and their enforcement, the best way for
Australian regulators to confidently control the airworthiness of Australian aircraft is on
Australian soil. This solution, however, will require rectification of some impacts of recent
changes to the licensing scheme in this country, as we will explain in the next chapter.
RECOMMENDATIONS
•
RECOMMENDATION 6: That an urgent review be undertaken of Australia’s safety oversight
of offshored maintenance, having regard to the diminished effectiveness of the international
regulatory system in detecting and discouraging unsatisfactory practices
This review should examine the extent to which the current ICAO regulations provide
clarity and certainty around the safety oversight of offshored maintenance, and should
form the basis of recommendations for new quality assurance mechanisms that can be
applied either within, or additional to, the current international scheme. The review
should note the inconsistencies in ICAO regulation, the evident violations of good safety
practice that have emerged in the course of this research, and the precedent set by the
FAA in negotiating a “trust but verify” model of mutual recognition in its agreement with
EASA.
•
RECOMMENDATION 7: That air operators increase their own safety oversight of offshored
maintenance, with CASA playing a greater role in the inspection of offshored maintenance
facilities to which it has issued part 145 approvals. The increase in inspection frequency and
intensity should be funded by the offshoring air operators, on a full cost-recovery basis.
•
RECOMMENDATION 8: That CASA be required and funded to build its capacities for
inspection, specifically in terms of the number of inspectors and their training in the latest
auditing techniques.
108
Chapter 8 - The New Suite of Maintenance Regulations: Issues of Safety Oversight
Chapter 8 The New Suite of Maintenance
Regulations: Issues of Safety Oversight
8.1. Introduction
This chapter explores how the introduction of a new set of regulations around aircraft
maintenance in Australia based on the European Air Safety Agency (EASA) system, implemented
in Australia through the Civil Aviation Safety Regulations (CASRs), may affect the safety of
aircraft maintenance within Australia. Together with Chapters 6 (on Australian and international
safety regulation in an age of offshoring) and 9 (on the implications of the CASR licensing
reforms for training), it maps out how the regulation of aircraft maintenance has changed
through the ongoing Civil Aviation Safety Authority (CASA) Regulatory Reform Program (RRP),
and some issues that have emerged during this process.
Contests over the conditions of “safety” and “airworthiness”, and the scope of “safety work”,
have often taken the form of esoteric disputes over the terminology in regulatory
documentation. Fertile ground for such a contest exists in the voluminous and highly complex
regulatory instruments, ranging through the Manuals of Standards (MOS), Acceptable Means of
Compliance, Guidance Material, Airworthiness Bulletins, Advisory Circulars and Aviation
Advisory Circulars, where clarity and consistency is sometimes lacking. The recent Aviation
Safety Regulation Review (ASRR) remarked on the complexity and opacity of Australian aviation
safety regulation – as well as the potential penalties attached to non-compliance, even if
unintentional.1 The regulation of aircraft maintenance licensing is a particular case in point,
although the ASRR barely mentioned it. The ASRR did, however, opine that the current RRP is
“having a negative effect on effective safety oversight” (our emphasis).2
This chapter shows how the authority and autonomy of the licensed aircraft maintenance
engineer (LAME), a crucial line of safety defence in the International Civil Aviation Organisation
(ICAO) Annex One system, are put at risk of being eroded under the new arrangements. It points
out how the new CASRs taken together appear to shift risk and liability from CASA to other
players in the system – notably the training providers and employers, who now take on greater
responsibility for, and therefore assume greater power over, the (assessment of the)
competence of their employees. This, along with other changes we consider, may have the
effect of obscuring clear lines of accountability. In this chapter we also examine key aspects of
the LAME’s labour process, and examine the issue of small plane - general aviation (GA) licensing
(now referred to as Small Aircraft Licensing, or SAL). This has been the subject of intense
controversy, which at time of writing is still not resolved.
8.2. The role of the aircraft maintenance engineer licence holder
We begin with the international regulatory scheme’s lynchpin that protects passenger and
aircrew safety by guaranteeing the quality of maintenance – the aircraft maintenance engineer
license holder (the LAME) – or the “certifying employee”. The linguistic slippage between the
1
Australian Government, 2014, p. 96. The ASRR mentions cases “where a quite simple provision has
transformed into a confusing statement, which imposes significant penalties on anyone who fails to
comply” (p.96).
2
109
terms “licence holder” and “certifying employee” exemplifies the contest over the powers
invested in the licence that is at the centre of this chapter.
In the work of James Reason, and in the ICAO documentation in which Reason’s work figures
prominently, the trained expert with technology and safety uppermost in his or her
considerations should have the last say in whether or not a technical system can be deployed
safely.3 Expertise is testified by qualifications and (usually) by a licence issued by the State.
Accordingly, Annex One to the Chicago Convention, which governs personnel licensing, defines
the role of the LAME:
The privileges of the holder of an aircraft maintenance licence shall be to
certify the aircraft or parts of the aircraft as airworthy after an authorised
repair, modification or installation of an engine, accessory, instrument, and/or
item of equipment, and to sign a maintenance release following inspection,
maintenance operations and/or routine servicing (Annex 1, 4.2.2.3)
ICAO distinguishes between certifying that a stage of maintenance has been correctly
performed, and certifying for release to service (CRS) – also sometimes known as “maintenance
release” – i.e. certifying that the plane is “airworthy”.4 “Maintenance” is defined as any work on
an aircraft that affects its airworthiness. Although most signatories to the Chicago Convention,
including Australia, have legislated that the ICAO Annex One LAME, as an agent of the state, is
responsible for ensuring that after maintenance planes are ”safe”, the recent regulatory changes
have begun to erode the LAME’s role. Terminological shifts seem to allow certain aspects of the
certification work of the LAME to be transferred to “certifying employees”, “specialist
maintainers”, or (most recently) “competent persons”, opening the way to extending such
privileges to people with lesser qualifications, in breach of treaty obligations.
ICAO regulation itself can appear not entirely consistent on the privileges of the LAME, in that
Annex One (4.2.2.4) also permits the option of a scheme without licences, but only so long as the
certifying personnel are trained to the same level as a licence holder. Annex One also makes this
clear:
When a Contracting State authorises an approved maintenance organisation to
appoint non-licensed personnel to exercise the privileges of 4.2.2, the person
appointed shall meet the requirements specified in 4.2.1. (Annex One, 4.2.2.4).
This paragraph specifies that the only difference between a person who can certify for
maintenance as an Annex One (4.2.2.3) licensed person, and an Annex One (4.2.2.4) unlicensed
but “approved” or “authorized” person, is the possession of the licence – which in this
interpretation functions purely as a permit. The “approved” but unlicensed person would have
the same knowledge, skills and experience as a LAME, but just would not hold the licence. This
crucial point is sometimes overlooked or obscured, and the sub-paragraph has since opened the
way to dilute the licence-based framework. This point is crucial because, as we will argue below,
in combination with other aspects of the CASA RRP (CASR Part 145) employers would determine
3
Reason, 1997, p. 195ff; Reason and Hobbs, 2003; ICAO 2008
4
There is some confusion among key terms like “CRS”, “maintenance release”, “maintenance
certification”, and “airworthiness review”. In some interpretations, the CRS may not necessarily indicate
that the plane is “airworthy”, since it could be taken to mean releasing the plane to the operator noting
that there are a number of defects that need attention. These are technical points, which we cannot solve
here but which would be surfaced by plain language rewriting. Here, the “simple” meaning above is
adequate. Correspondence from Partner Organisation, 22 June 2015.
110
whether the “certifying employee” meets the requirements of Annex 4.2.1. This change would
shift the balance of power in the relation between the employer and the LAME, potentially
impeding the latter’s ability to perform their socially protective function.
The LAME’s role itself embodies an inbuilt contradiction. S/he must on the one hand function as
an inspector operating under delegation from the State, and at the same time work as an
employee of the business whose work s/he is certifying. That is, in addition to performing a
socially protective5 role, s/he is also an employee, entrenched in conflicts over wages and
conditions, and in many cases a member of a union or professional association with its own
strategic interests. Sometimes, “safety” overlaps with the industrial interests of the LAME and
her/his union or professional association. At other times, industrial conflict can involve
opportunistic use of the protective function to “press the safety button”. Airworthiness is thus
intimately tied up with the industrial and regulatory protection of, or constraints on, the
individual who is at the centre of what Reason6 calls the conflict between protection and
production – between safety and profits – in this case the LAME.
It is important for this person to feel assured of support from both the regulator and industrial
relations law in the difficult “conversation” that can occur between a manager wanting to get
the plane back into service and the LAME concerned that something is not quite right. Below we
give examples of such “conversations” from our interviews, without being able to assess how
typical these comments are. Nevertheless, but among the 708 responses to our 2012/2013
survey of maintenance workers, 384 respondents answered a final open-ended question, and
167 of them expressed concerns about the implications of training and licensing changes.
Additionally, concerns were expressed during interviews 7 and the following quotations from
interviews are relevant here:
The corrosion in the engine bearer was so bad I could push my screwdriver
through it. …the boss actually told me sometimes you’ve got to compromise
safety for the sake of operations. I said: but ten people could die, and he said:
well, we’ll just have to risk it. I said no, we don’t …. 8
I know that I have never compromised my standards, but I had the union to
support me but I also had the fact that the department supported me… But
now I feel sorry for these guys, you know, because they don’t have much
legislation to support them. 9
It will be noted already that these “conversations” were not only high-stakes from the point of
view of the LAME concerned – not to mention the passengers – but were conducted in a way
which was not conducive to a logical or consensual resolution. Other examples from the
project’s interview database include the following, which highlight the intensity of the industrial
relations issues around safety, as well as the crucial role of collective organisation in the
protection of passenger safety.
Australian LAMEs typically also would tell the boss to go and get stuffed if the
individual thought there was a safety issue and the company said look, push it
on, it’ll be fine. The Australian LAMEs would say go and get stuffed, it’s staying.
5
Polanyi, 1944.
6
Reason, 1997.
7
See Appendix 1, Methodology, for details of the survey and interviews.
8
9
Ibid.
111
It’s going to stay on the ground until I fix it, and he’d take on the world. That’s
still basically the case. 10
[The employer] will rebuke the LAME association for having this, they call it a
belligerent attitude. But I still think this is what keeps Australian safety so good,
is that this so-called belligerent attitude that [the employer] might say that we
have, is exactly the thing, the character of an Australian LAME that means the
Australian public may have that slight element of safety that you may not get
in more subservient societies ….. 11
LAMEs’ ability to stand firm against pressures to prioritize “production” over “efficiency”
depends on the extent of protection by law and/or the conventions in industrial relations
systems. Unfortunately this protection appears not to be guaranteed under present Australian
laws, as the 2012 Sunstate case demonstrated. In this case, the Court found that certain
provisions of the Civil Aviation Regulations 1988 – namely the obligation to report a defect 12 –
were not workplace rights as defined in the Fair Work Act 2009. LAMEs at the Qantas subsidiary
Sunstate Airlines had found that entry to the cockpit of a plane could be gained by use of
identity cards or paddle-pop sticks, and reported this as a defect. The company argued that this
was not a “safety” issue but a “security” one and not LAMEs’ business. The Australian Licensed
Aircraft Engineers Association (ALAEA) took industrial action, which it justified on the grounds
that the cockpit security affected airworthiness. The employer eventually stood them down. The
Court found that the obligation under the CASRs to report a defect did not constitute a
“workplace right”.13 Perceived implications are that potentially, an employer can issue directives
overriding professional and socially protective obligations even if those are based in regulation.
How important this precedent will be remains to be seen.
The role of the LAME combines a statutory responsibility to act independently with a
responsibility under employment law to comply with directions of the employer, and instances
will often arise where the two are in tension. This tension was undoubtedly easier to manage in
the days when a good safety record was a source of competitive advantage to an airline, and
good aircraft engineers were regarded as a valuable corporate asset. In more recent years, the
long-term decline in accident rates appears to have increasingly encouraged an attitude of
complacency, especially towards those aspects of safety that are less visible for both airline
operators and their customers. Conversely, competitive pressures have created a new urgency
both to contain the costs of safety-related maintenance and to put planes back into the air as
quickly as possible after a malfunction or scheduled check. In this new environment, the role of
the LAME has become a focal point of both industrial and regulatory conflict, with potentially
serious safety consequences.
In some parts of the world, however, the model of the licensee enjoying statutory independence
either never applied, or gave way as far back as the 1950s to an alternative arrangement, which
Haas14 calls the company model. In this model the responsibility for ensuring airworthiness after
maintenance has been completed lies with the employing company rather than the certifying
person, who operates solely as an agent of the company. Since the conflict between the two
10
Interview, LAME, 2009.
11
Ibid.
12
Civil Aviation Safety Regulations CASR 1998 (CASR 1998), Part 42.355, “Reporting Defects”.
13
Federal Court of Australia, 2012 , especially pp. 140-141.
14
Haas, 2010.
112
models was central to the way the EASA scheme developed, it is worth looking in some detail at
the practical differences between the two, starting with Haas’s account:
One factor that the two systems have in common is that the company names
the certifying staff. In a licensing system, it is the state (the national aviation
authority) that satisfies itself that the candidate possesses the necessary
competence... [A] licence is issued that serves as both a proof of basic
competence and a permit. Under a system of company training, by contrast,
the competence assurance is delegated to officially accredited maintenance
companies. The role of the supervisory authority is restricted to approving and
making spot checks of the internal organisation at the firm… Unlike in the
licensing system, the company does not require approval to authorise a
person. A career in an accredited training system of the company is sufficient
as proof of competence. There is no licence in this regime of internal training
and job markets.15
As Haas notes, the company model has significant practical attractions for many of the parties
involved, especially employers:
The supervisory authority has the advantage of passing on monitoring costs to
the companies (testing, traceability of work histories, record keeping and
release authorisation checks). And… the companies have more leeway:
company-specific instead of standardised skills profiles, allowances in assigning
release authorisation, and moderation in wage level.16
Partly on the strength of these perceived advantages, there has been pressure from some
quarters to move away from the licensing system since at least as far back as 1958, when the
ICAO actually canvassed a system along the lines of company licensing. At the time, it was
rejected by a majority of member countries, specifically including Australia, but others including
Afghanistan, Ethiopia, France and the US were firm in their continuing allegiance to their
established company models.17
When the European Economic Community (as it then was) began work on coordinating the
training and qualification requirements for aircraft maintenance across Europe, France and
Belgium were the only two among the then 27 member nations to operate outside the licensing
framework. France in particular exerted considerable effort to achieve a system which would
give equal standing to the licensing and company models and allow a free choice between them.
Although the initiative was strongly opposed by the remaining members, the European Union
(EU) Commission eventually forced a compromise because the size of the French maintenance
repair operations industry would have made it absurd to exclude France from the common
European framework. This compromise involved the development of a shared model for
recognising equivalence of qualifications, but left the issue of whether to adopt a licensing
system as such open to the discretion of individual member nations.18
Importantly, this discretion survived in linguistic ambiguities in the EASA regulations, which went
further than the strictly circumscribed latitude within Annex One, as described above. EASA used
such terms as “certifying staff” and “support staff” which could refer at once to B level LAMEs,
15
ibid., pp. 603-4 (emphasis added).
16
ibid., p. 604.
17
ibid., p.603.
18
Haas, 2010, pp. 604-611.
113
and to non-licensed personnel approved by Part 145 approved maintenance organisations
(AMOs) (see below). Base maintenance could be performed by “qualified” people – leaving it
open to employers to determine the type of “qualification” – which (in Europe) could be from a
very large range, some of them potentially unrelated to the task.19 These and other ambiguities
have found their way into the CASR and related documentation, which CASA resolved to
introduce in Australia from 2006, and which we trace below.
Many of the uncertainties and risks involved in CASA’s approach could fairly be attributed to
their origins in the internal politics of the EU. In the event, however, contradictions are
appearing as the new Australian licensing system emerges, which pose risks to its integrity and
international alignment, and the remainder of this chapter describes how this is starting to
occur.
8.3. Reforming the maintenance suite of regulations
8.3.1 Part 66: Moving to EASA harmonisation
After preparing for some years to move Australian airworthiness legislation closer to the United
States (US) Federal Aviation Regulations (FAR) system, CASA abruptly switched course around
2000 20 and began developing a new set of additions to the 1998 Civil Aviation Safety
Regulations (CASRs) based on the EASA system. Full implementation did not begin until 2007,
and the process took some time to show results. The new regulatory structure came into force
on 27 June 2011, with a four-year transition period, taking the timeline for final implementation
to June 2015. However, the timeline has been extended to 2019 for certain components of the
former system, notably to do with exclusion removal and licensing in the small aircraft
maintenance sector.
CASA issued a Regulatory Impact Statement (RIS) in 201021 which provided arguments in favour
of the implementation of the EASA-based suite of maintenance regulations. The proposed new
system, it argued, would allow increased international labour transfer between Australia and the
various jurisdictions of Europe, as well as other international EASA-approved MROs, through
mutual recognition of skills, qualifications and licences. It would, the RIS argued, also aid in
attracting MRO work to Australia, and in bolstering the local industry’s competitiveness.22 It
would improve the labour “flexibility” considered necessary to meet the technical demands of
modern aircraft maintenance by overcoming work demarcations with their roots in obsolete
licence categories. The training and learning required to gain licence privileges would be less
expensive than under the previous regime. These claims in effect provide a partial checklist
against which the licensing reforms can be judged, and we briefly digress to foreshadow how
they have fared in hindsight.
First, the expectation that harmonisation between Australian and European regulations would
improve transferability collided with reality when, following the transition in June 2011,
Australian LAMEs were reportedly unable to gain work in Europe with their new CASR Part 66
19
Interviews, Robert Alway, President, Air Engineers International, Ola Blomqvist, Vice President, Air
th
Engineers International,39 Congress of Air Engineers International, Istanbul, 4-9 October,2011.
20
The exact point in time at which the decision to introduce the EASA system into Australia was made, as
well as the underlying decision processes, merit historical investigation, as there are multiple and
conflicting accounts in the industry – some of them quite contentious. To our knowledge, there has been
no comprehensive explanation of the shift.
21
Civil Aviation Safety Authority (CASA), 2010d, pp.8-10.
22
Ibid., p.3.
114
licences. The example given in the RIS text was of Europeans transferring to Australia, not the
other way around.23 The ASRR 24 commented that for international transferability of skills,
qualifications and licences resulting from harmonisation would require intergovernmental
agreement.
Second, the RIS argued that more efficient deployment of labour would result from the
regulatory reforms. It provided the example of servicing a hydraulic system, part of which was an
electric pump, which in Australia (so it was claimed) required three licensed engineers, but in
Europe required only one.25 However, the Australian Licensed Aircraft Engineers Association
(ALAEA) response26 to the CASA RIS pointed out that this example confused the concepts of
licence holders with licence categories – in Australia, while the example chosen did indeed cross
licence categories, it was possible for one licensee to hold endorsements in all three categories
and in that case only one appropriately licensed engineer would be required, not three. Further,
CASA itself had previously endorsed the practice of LAMEs being called upon to work outside
their endorsed licence categories – in particular licence holders endorsed for engines and
mechanical categories might perform and sign for electrical work.27
A third point was the cost of training. Briefly the new EASA B licences require Diploma level
qualifications, whereas Australian training funding extended only to Certificate IV, leaving a large
training gap to the Diploma. First, the RIS put this training gap at 550 hours on average,
28
whereas it is in fact in the order of 1,000 - 1,500 hours (see Chapter 9). Second, the CASA RIS
indicated the cost of this training would be borne by government, yet state training authorities
have almost uniformly refused to fund it. Third, the CASA RIS claimed the cost of gaining a
licence endorsement through the previous route of self-study and the CASA Basics exams (see
below) exceeded the cost of the new pathway. This is implausible.29 The new “full” licence
structure also requires ratings in categories that some Civil Aviation Regulation (CAR) 31 LAMEs
would not necessarily have. We return to these issues below and in Chapter 9.
At this point, we set out explain key differences between the former and reformed licensing
systems. The suite of maintenance regulations consists of CASR Part 42 (continuing
airworthiness), Part 145 (Approved Maintenance Organisations), Part 147 (Approved Training
Organisations (ATO) and Part 66 (licensing structure and privileges). We discuss Part 66 first, as it
covers personnel licensing.
23
Civil Aviation Safety Authority (CASA), 2010d, p.8.
24
Australian Government, 2014. According to the ASRR , “… many mistakenly expect that if Australia
harmonises its regulatory suite with an overseas jurisdiction, then CASA-issued approvals or certificates
will automatically be accepted in that foreign jurisdiction” (p.97). It would have been helpful had this point
been clarified at the time.
25
Civil Aviation Safety Authority (CASA), 2010d, p. 3.
26
Australian Licensed Aircraft Engineers Association (ALAEA), 2010.
27
Civil Aviation Safety Authority (CASA) 2002, p. 15 states: “In many instances, a licensed engineer can
carry out and sign for maintenance in areas not normally associated with the area their licence covers –
for example, an airframe LAME can do some (restricted) work on electrical systems, instrument systems
and radios”.
28
Civil Aviation Safety Authority (CASA), 2010d, p.7.
29
Anyone wishing to follow the calculations is referred to Civil Aviation Safety Authority (CASA), 2010d,
pp. 6-7; and Australian Licensed Aircraft Engineers Association (ALAEA), 2010, pp. 3-4.
115
Part 66 defines new (to Australia) licence categories based on the EASA system, with higher-level
qualifications indicating higher theoretical knowledge attached to the main licences.30
Significantly, however, the new licensing system also proposes some new and most controversial
forms of licence, one at sub-trade level.
8.3.2 Background – The CAR 31 licensing system
To understand the changes, it is necessary to know how the former licensing system, regulated
under CAR 31 that had developed in Australia, differed from the new EASA/CASR system. The
former system’s building blocks were categories and (group and type) ratings. There were five
categories: airframe, engines, electrical, instrument and radio. The concept of groups referred to
aircraft and systems with strong similarities, while types refers to systems and structures that
are sufficiently different from each other, as well as sufficiently complex, to warrant focussed
training and their own licence rating. As pointed out in the next chapter, these categories
corresponded neatly to aircraft maintenance trades, but were rationalised in the early 1990s.
These concepts of categories and types are usefully portrayed on a grid (see Table 8.1), with the
main division being by weight [8,000 kg as specified by CASA (after the 2011 reforms 5,700 kg)] –
groups 1-3 registering planes and systems with strong similarities to each other, and higher-level
groups devoted to specific aircraft and system types. A person might be trained, qualified and
licensed in Group 1 engines (allowing them to work on, and certify maintenance for piston
engines in light planes). A mix of Group 1 airframe and engine was most common in GA.31 Group
21 in the category “Engines” covered engines that might be found on a large passenger plane,
and required specific knowledge and experience about one particular large complex engine.
These were seen as sufficiently unique and different to each other to warrant a separate licence
type.
One common career path would start by working on broad groups in GA and then become
qualified and endorsed to sign for work on larger more complex types in the RPT sector. The
latter work is generally better paid, with pay increments linked to licence types. Thus an orderly
career path existed from GA to RPT. As the licence contained many more separate categories
than the later EASA licences, it was possible to acquire them piecemeal and in a targeted fashion
throughout a working life, rather than requiring a large dose of front-end theory training, with
the experience and “type” training requirements added later. This allowed more flexibility and
specialisation in the acquisition of licence endorsements as well as more flexibility in studying to
attain them. Aspiring licence holders would need to demonstrate knowledge and experience for
each of the ratings they sought, by sitting the so-called “Basics” examinations, administered by
CASA. CASA would also assess the applicant’s “Schedule of Experience” (SOE) — in order
determine whether the applicant had sufficient experience to be awarded the licence
endorsement sought for work on a particular aircraft component or system.
30
Civil Aviation Safety (CASA), 2015f.
31
In addition, a semi-formal dispensation existed by which CASA allowed holders of airframe and engine
categories to certify for some electrical work. See Civil Aviation Safety Authority (CASA), 2002, p. 15, which
states, “In many instances, a licensed engineer can carry out and sign for maintenance in areas not
normally associated with the area their licence covers – for example, an airframe LAME can do some
(restricted) work on electrical systems, instrument systems and radios.”
116
Table 8.1 Licence groups under the CAR 31 system
Groups
Airframes
Engine
Electrical
Instrument
Radio
1
Aeroplanes not
covered in Groups
2-20
Piston engines
in aeroplanes
and airships
Single
generator
power
systems
All general
instruments
not in Groups
3 or 20
VHF and HR
other than
Group 20
2
Helicopters not
with hydraulic
flight control
Piston engines
in Helicopters
Autopilots
(except Group
20)
Audio and
cockpit
recorders
3
Wooden Airframe
Supercharging
and turbo
charging
systems
Multi
generator
systems
except Group
20
20
Aeroplanes, with
(jets) and heavier
than 8,000 kg as
specified by CASA
(after 2011
reforms now
5,700 kg)
21
22
Piston and gas
turbine
engines in
aeroplanes
and airships
Piston and gas
turbine
engines in
Helicopters
Auto pilots
(except Group
20)
Electrical
systems in
aeroplanes
above 8,000
kg
(after 2011
reforms now
5,700 kg)
Radios in RPT
sector
Source: Adapted from CASA, 2007b, pp. 19-20 and CASA, 2002, pp. 16-18
8.3.3 The EASA/CASR reforms to the licensing system
The CASR reforms incorporate the five categories of licence into the two EASA classifications of
B1 (Mechanical) – composed of the former categories of airframe, engine, electrical; and B2
(Avionics) – composed of the former categories of electrical, instrument and radio. A B1 licence
holder signs for airframe, engine and electrical work; the B2 signs for avionic work. When
supplemented by appropriate type training, B licences confer privileges over multiple types of
aircraft and systems. The underlying theoretical knowledge is correspondingly broad and
comprehensive, justifying a Diploma qualification. The EASA Part 66 regulations 32 specify around
2,400 training hours to qualify for a B licence (depending on the precise category), in addition to
a period of industrial experience, the length of which varies according to when the trainee
commenced training. A person seeking a B licence requires five years of industrial experience if
they have no relevant technical background, and 2 years’ experience following completion of a
relevant course of study at Diploma level or an apprenticeship.
32
The CASR Part 66 MOS did not, at the time of writing, specify numbers of hours for “category” licence
training.
117
Crucially, the EASA regulations and the CASRs provide for two new licence categories of “release
to service” engineers, category C and A, confined to base and line maintenance respectively.
Category C licence holders issue CRS (Certificates of Release to Service) based on maintenance
certifications issued by “support staff” – B licence holders – in base maintenance.33 However
Category C licence holders cannot themselves perform maintenance certification (for a stage of
maintenance).
Category A licence holders can sign for and perform work listed in the Part 145 Manual of
Standards,34 including the replacement of wheel assemblies, brake units, emergency equipment,
ovens, boilers, beverage makers, lights, seats, harnesses and aircraft batteries. But the scope of
the Category A licence can also be extended to the replacement of any other component if the
task is one that CASA approves as a simple task (emphasis added). Category A licence holders
can also perform “simple defect rectification”. Significantly, Category A licence holders can sign
for their own work (but not supervise the work of others) and can issue a CRS,35 but only
following line maintenance and then only for specific and limited maintenance activities.
Under the Australian CASRs, the Category A licence can be awarded after Certificate II level
training (680-800 hours) and two years’ work experience, although it can also be attained by
Certificate IV qualified AMEs after appropriate bridging training. A range of interview and survey
respondents expressed concerns that the Certificate II path does not provide sufficient training
and experience, and that a Certificate II/Category A licence holder will as a result lack sufficient
experience and “maturity” to release a plane to service safely – particularly in light of the
pressures that the job may entail, as described above.
CASA’s prerogative to “approve any task as a simple task” (described above) offers possibilities
for broadening the scope of the A licence. Consider “phased maintenance” which involves rolling
some elements of what was previously base maintenance (B and C checks) into A checks,
traditionally considered part of line maintenance. This could potentially bring some maintenance
operations previously certified only by a full CAR 31 LAME within the purview of the Category A
licensee, whose training and experience are well below the level that would have been needed
to qualify for any kind of licence under the old system. Many interviewees argued this was a
serious breach in safety defences. Others disagreed. Much depends on the level of training
associated with the licence.
In Europe, the Category A licence is underpinned by varying qualification and training structures.
In some countries, notably Sweden, it is not used at all (at time of writing). In others it is used
extensively, but entails higher levels of qualification. In Germany, the Category A is generally
grafted into a three-year apprenticeship, (although admittedly variation does occur).36 In Britain,
a young person who starts as an apprentice mechanic or fitter can gain apprenticeship
qualifications after three years of training and can gain a Category A basic licence after a total of
four years of training or a Category B after five.37 Australia, however, has set the Category A and
its associated qualification at the bottom of the range, following EASA regulations that set the
number of training hours for a Category A licence at 620-800 (plus two years’ experience).38
33
Civil Aviation Safety (CASA), 2011a, p. 3.
34
Civil Aviation Safety (CASA); 2011c.
35
Civil Aviation Safety (CASA), 2011a, p. 5.
36
Interviews at AEI Conference, Turkey, 2011; Alway, Blomqvist (see Footnote 14).
37
Lewis, 2012, p.16.
38
See Chapter 9 which gives required hours from the Victorian Purchasing Guide for the MEA11 Training
Package.
118
The CASR Part 66 MOS appears based on the assumption that an ICAO Annex One licence is
equivalent to a Part 66 licence. Yet the Part 66 Category A licence allows important sign-off
privileges, including CRS, although it is based on a sub-trade (Certificate II) level of training. An
important issue requiring further exploration is the question of whether the Category A licence,
when based on a Certificate II level of training, is in fact ICAO compliant.
8.4 CASR reforms to continuing airworthiness
8.4.1 CAMOs – Continuing airworthiness management organisations
CASR Part 42 outlines a new approach to continuing airworthiness based on separating the
responsibility for continuing airworthiness management, now to be performed in continuing
airworthiness management organisations (CAMOs), from the performance of maintenance itself,
carried out in Part 145 approved maintenance organisations (AMOs).39 CAMOs administer
aircraft maintenance programs, records and schedules, and these are communicated to air
operator certificate (AOC) holders and AMOs. The CAMO could be a separate organisation, or
could exist within an AOC-holding organisation, but if the latter it must maintain internal
organisational separation of function.40
The purpose is to ensure that responsibility for airworthiness and safety rests ultimately with
AOC holders and cannot be delegated. Part 42 emphasises the separation between certifying for
the completion of a stage of maintenance on aircraft or aeronautical products, which is the
responsibility of the AMO, and certifying for release to service (CRS), for which the CAMO (of
course employing a LAME) is responsible.41
Whilst endorsing the principle upon which the separation of function is based, experts are
divided on the merits of how the division between management and performance of
maintenance is playing out in practice. This is because the CAMO, with formal responsibility, is
ultimately reliant on the technical expertise of the LAME in determining that an aircraft or
component can be released to service. One expert interview participant believed the
organisational separation of functions could create opportunities for miscommunication and
disarticulation, particularly if the regulations are unclear and/or poorly understood. Potential
geographic separation adds another safety concern, as one former CASA inspector and
maintenance manager opined:
We’ve created three certificates issued by CASA; three independent bodies
responsible for this one aeroplane. You’ve got the operator here that’s going to
fly it. You’ve got the CAMO that’s going to manage the airworthiness and the
documentation to it. Then you’ve got the maintenance org over here that’s
going to be contracted to do work on it. So you’ve got three silos now. When
you’ve got silos and you’ve got to have things work between them, that’s when
the problems can arise. 42
Another maintenance manager saw an advantage for safety in separating the planning from the
execution of maintenance, echoing a LAME’s concerns about being overridden by over-zealous
managers:
39
Civil Aviation Safety Authority (CASA), 2011a; 2011b.
40
Civil Aviation Safety Authority (CASA), 2011b.p .4.
41
Civil Aviation Safety Authority (CASA), 2011a, p.3.
42
119
...they could ask for something to be done which is against the intent of the
regulations. But if they’re also in the line of command then they could put
undue influence on the engineer to do the maintenance that they specify, not
the maintenance in accordance with the regulations.
If they’re in the same chain of command then it’s very difficult to separate what
is a request versus what is a directive for the engineer on the floor.43
Other issues requiring further clarification within the new regulations include the concepts of an
“airworthiness review” i.e. that an aircraft has conformed to pre-set maintenance schedules and
airworthiness directives – and an overall judgement of airworthiness such as is implied in signing
the certificate of release to service.44
The stated intent of the new role separation is to ensure that the AOC holder is accountable for
safety. Nevertheless, research interviews revealed quite widespread concerns about the
potential risk of breaches to a key airworthiness safeguard: the requirement that a person who
signs off on the performance of safety-critical maintenance actually has witnessed or supervised
its performance to standard, before the plane can be released to service. In Europe, although
the practice is illegal, it is reported that un-licensed people within CAMOs have signed
certificates of release to service completed by licence holders, on receipt of certification from
Part 145 AMOs that an “airworthiness review” has been conducted.45 Though we cannot
independently verify these claims, their existence counsels caution. It is important to ensure that
Australia implements CASR Part 42 in a way that is fully internationally compliant and that also
that airworthiness sign-off be conducted only by licensed personnel who have supervised the
performance of safety-critical work to standard
On the other hand, particularly with the emergence of independent MROs, the separation –
provided it is well managed – may also be an appropriate organisational form for consolidation
of maintenance capacity across a number of smaller MROs. For example, one organisation could
keep and update maintenance schedules for a number of different planes, and these records
and maintenance manuals could be accessible from a number of small shops — provided the
scope of Part 145 is extended below aircraft of 5,700 kg maximum takeoff weight (MTOW). It
could also provide new career paths from L/AME into management.
The conclusion must be that CAMOs have advantages and disadvantages, and that some further
clarification is required, even among experts, of their merits, role and powers. So far, it is mainly
airlines and a handful of independent MROs that are listed as CAMOs on the CASA website.
There is justification for ongoing and enhanced monitoring of how CAMOs work in practice, and
analysis of how, in any future restructuring of the industry, their organisational flexibility be
exploited to the best advantage.
8.4.2 AMOs - Approved maintenance organisations
Part 145 regulates organisations that provide maintenance, known as approved maintenance
organisations (AMOs). The CASR Part 145 Manual of Standards requires that an AMO develop a
“maintenance exposition”,46 which is a document setting out the following: clearly defined roles
for an Accountable Manager, a Responsible Manager, a Quality Manager and a Safety Manager.
43
Interview, Senior Maintenance Manager, major Airline, 2014.
44
See footnote 4 above.
45
th
st
Reported at 39 AEI congress, Istanbul; 4-9 October, 2013; 41 Congress, Melbourne, 29 November,
2013.
46
Civil Aviation Safety Authority (CASA), 2011c; 2015d, 2015e.
120
The AMO must implement Safety Management Systems (SMS), including drug and alcohol
testing, and must ensure that Human Factors training has been completed. Importantly, it must
now describe the processes by which it (the AMO) will formally authorise and approve licence
and qualification holders to carry out and certify for maintenance.47 It must ensure that a
certifying employee has an adequate understanding of the aircraft and/or aeronautical products
referred to in their certification authorisation, and of the AMO’s procedures and of the
maintenance exposition itself.48
Importantly, the AMO is now held responsible for approving its employees’ competence to
perform maintenance tasks including certifying for maintenance.
An AMO must specify standards (including, but not limited to, qualifications
and experience) in its exposition for the competence of individuals involved in
any maintenance, management or quality audit task and must ensure these
individuals meet the standards for a task that they are authorised to perform.49
This could be read as a shift towards the “company approval model” outlined earlier. Questions
have arisen, and have been frequently voiced by our interviewees, over how this responsibility is
intended to interact with the qualification and licence. A senior maintenance manager explained
the significance of the change as well as acknowledging its subtlety:
… what comes on top of just having a licence is things like induction training,
training on your procedures and your documentation, training on the
differences because each airline orders their aircraft in a different specification,
different mod status to just about everyone else, so you’d need differences on
what’s changed.50
From one point of view, requiring a company to take responsibility for the competence of its
employees is simply formalising something that is part and parcel of an employment
relationship. When an employer employs a licence holder, and allocates work to them, s/he is in
effect “approving” the person to do work for which they are qualified and licensed. From
another point of view the new system may place too powerful an industrial relations lever in
employers’ hands, swinging the balance between production and protection back to the former.
So that means you can’t just leave and go to another place if you’ve got a lousy
job. So then you’re compromising safety by blokes knowing they’re going to
lose their job and not be back on that pay level for a long time. Your licence is
not portable in that regard whereas before you could leave from TAA one day
and be assigned that aircraft at Ansett the next. So they’ve - basically they’ve
castrated LAMEs’ independence. 51
Well they’ve got to show they’re competent and that they’ve been trained on it
but they don’t need anything like the experience that we used to require. Or,
it’s left to the employer to decide that. Well that’s a bit too flexible I think.52
47
Civil Aviation Safety Authority (CASA), 2011c; 2015e.
48
ibid.
49
Civil Aviation Safety Authority (CASA 2011c), 145 A 30 d, p. 4.
50
Interview, Senior Maintenance Manager, major Airline, 2014.
51
52
Interview, LAME, 2011.
121
Since the determination of competency has such strong consequences for both industrial
relations and safety, there is a strong case for requiring that the company approval process
should be open to participation - for example, a committee with employee representation could
make the determination. Exactly how different companies are using these approval powers and
their consequences remains a matter for further research.
Company approvals may build another layer of defence into the system, which may be
important if there are deficiencies in the training, qualifications and licensing systems.
Employers’ approvals could also play a positive role in the assessment of current competence,
since the VET qualifications framework is not designed to support periodic reassessments of a
qualification holder’s competence over time.53
On the other hand, in the event of a maintenance issue caused by faulty training (the person not
knowing what they were doing) it is unclear where liability would lie. The poorly trained
employee might defend himself/herself by insisting that he/she had been trained and assessed
in an organisation approved by both CASA and the VET regulator, as well as having been
approved by the employer. The employer might say the approval depended largely on the
qualifications and licence endorsements, performed by the training provider and CASA. The
training provider might insist the person was competent at the time they were assessed,
although their skills had decayed and theoretical knowledge had been forgotten. CASA might say
the employer is now responsible for the employee’s competence, no matter what their
qualifications and licence endorsements are. There is no way of knowing how such
accountability would be resolved in a legal case. Such responsibility however needs to be
resolved, particularly in the context of the emergence of independent MROs. Support needs to
be provided to safeguard and enhance the supply of well-trained and currently-licensed
engineers, as part of the overall duty of care owed by a government to its citizens, which has
effectively been delegated to CASA.
8.4.3 The “Specialist Maintenance” controversy
Confusing and sometimes contradictory documentation around the licence opens the way for
the responsibility to certify for certain maintenance tasks to shift beyond the holder of an Annex
One/Part 66 licence to “certifying staff” who, may or may not hold licences, whose qualifications
may or may not be appropriate, and whose knowledge of aircraft systems may or may not be up
to the task. The CASR Part 145 MOS on the one hand affirms the role of LAMEs in performing
maintenance certification and issuing CRS:
An AMO may only authorise an individual to perform maintenance certification
and issue certificates of release to service for aircraft maintenance under the
following circumstances:
•
the person is the holder of an Australian Part 66 Aircraft Engineer Licence for the
aircraft/engine combination or rating in the licence category applicable to the
authorisation (the applicable aircraft/engine combination or rating); 54
However, the MOS also contains subtle conceptual slippages between the concepts of “holders
of Part 66 licences” and “certifying employees” who may or may not be licensed.55 This opens
the way for a conscious or unconscious normalisation of the migration of work from the former
to the latter.
53
Australian National Training Authority (ANTA), 2002.
54
Civil Aviation Safety Authority (CASA), 2011c, p. 5.
55
E.g. ibid., p. 7.
122
An apposite case is that of the “specialist maintainer”, usually a contractor, for example a skilled
welder, who is employed to perform specific tasks, and to sign for their work. The term used to
denote the latter process – “maintenance certification” – is ambiguous, and could equally refer
to contractors taking responsibility for their own work, or to the contractors’ certification that
their work has not affected the “airworthiness” of the aircraft – a judgment they are not
qualified or licensed to make. The latter is a higher order of certification, preserved by ICAO
Annex One to the licence holder or equivalent. Tasks the CASR 2011 Part 145 MOS allows
specialist maintainers to perform and sign for include non-destructive testing, welding,
borescope inspections, composite repairs, repairing in-flight entertainment equipment, and
“other maintenance as approved by CASA as specialist maintenance”.56
In the October 2014 Amendments to the CASR Part 145 MOS,57 CASA used the terminology of
“Specialist Maintenance Certifying Employees” to refer to the people approved to perform
specialist “maintenance certification”, and foreshadowed extending this list of tasks.
CASA intends to approve Part 145 Organisations for specialist maintenance “D”
Ratings for Non Destructive Testing (D1) or Welding (D2) or for other specialist
maintenance fields such as composite repair and aircraft surface finishing
(including painting & plating) under a “D3” Rating. CASA may also approve IFE
software, on-wing engine maintenance, borescope inspections and interior
furnishing (seats) as specialist maintenance for organisations for specialist
maintenance under their “A”, “B” or “C” rating. The list of specialist
maintenance fields for which CASA would issue approval at paragraph 145.A.30
(f) requires updating. Appendix I may require updating to reflect regulatory
intent.58
The ALAEA opposed extending the scope of specialist maintenance work on two grounds: first,
because it entailed the possibility of losing its own work coverage (although it insisted its
opposition was not industrially motivated), and second, because it violated longstanding
Australian regulation of the safety certification system based on Australia’s obligations under the
Chicago convention. Since the regulatory changes were, in fact, delegated legislation under the
Civil Aviation Act (1988), they had to be approved by the Senate – normally an unproblematic
process. The ALAEA therefore lobbied Senators to oppose the changes. This was a formidable
task of persuasion, since the issues are not easily explainable. They enlisted a senior QC, Mr
Brett Walker, whose subsequent opinion 59 laid out the issues.
The Walker Opinion accepted that Australia’s obligations under the Chicago convention required
CASA to accept the ICAO Annex One interpretation of the role of a licensed aircraft maintenance
engineer. Further, following ICAO Annex One, Walker argued that there were two forms of
certification – the certification of stages of maintenance, and the certification of airworthiness
and the release to service (CRS) (p. 4). Airworthiness “relates to the whole aircraft, and thus to
all of its many systems and materials” – it has a “holistic aspect” (p. 6). Thus, by expanding the
list of tasks that CASA intends permitting AMOs to approve non-licensed contractors or
employees to perform, the amended MOS contradicted the provisions of ICAO Annex One
(which reserve signing off on work that affects airworthiness for licence holders).
Further, CASA had contradicted its own Guidance material. The latter states that
56
Civil Aviation Safety Authority (CASA), 2011c, 145.A 30 (f), p.4)
57
Civil Aviation Safety Authority (CASA), 2014a; 2014e, Part 145.A.30(f).
58
ibid.
59
Walker, 2014.
123
Specialist Maintenance personnel are trained and qualified in the specialist
field and may not have a holistic understanding of the interrelationship of an
aircraft’s systems, or airworthiness implications, such that a Maintenance
Certification Licence holder should have. For this reason the Maintenance
Certification for Specialist Maintenance work will only be for the scope of the
specialist maintenance and is not intended to cover work normally performed
and certified for by a Part 66 Maintenance Certification Licence holder who is a
Certification Authorisation holder. Additionally the AMO may not authorise an
employee to issue a CRS predicated on the Specialist Maintenance
qualification.60
Walker accepts that it is “a real possibility that CASA did not intend, as a matter of policy, to
remove LAMEs from important aspects and stages of airworthiness evaluation, by making the
amended MOS” (p. 3). In the event, the Senate voted to disallow CASA’s proposed changes.
However, the ambiguities in the EASA-based regulations ensure this will be an ongoing issue.
This case would seem to affirm the wisdom of the ASRR in suggesting that Australian regulations
be re-written in a “third tier” of plain language regulation.61 Such a move would force existing
ambiguities to the surface where they could be debated, rather than be fought out in dense
dense thickets of regulation which actually obscure the crucial issues involved. Meanwhile issues
relating to the regulation of specialist independent MROs require resolution, particularly in the
non-regular public transport (RPT) space.
8.5 Implementation issues
While it is fair to say that the EASA system has bedded down to an extent, and now enjoys a
higher degree of acceptance than when first introduced, a number of implementation issues
emerged early and while some of them have abated, others continue to cause problems.
8.5.1. Clarity
A number of interviewees reported how when the new-system licences were first issued, some
LAMEs were left unsure about the scope of their privileges – that is, what they were entitled to
sign for, and what not – and some even report having lost privileges in the transfer. Even more
alarmingly, some LAMEs claimed to have been issued with privileges they did not formerly have!
In some cases, the new licences came with thirty pages of text, replacing one or two pages that
clearly described their privileges. This could present a serious safety issue, which could be
compounded in the event of a disagreement with an employer about the scope of an
employee’s licence. In addition, they found CASA’s style of writing regulations confusing (a point
also made by the expert Aviation Safety Regulation Review) while “strict liability” made
transgression costly and, presumably, anxiety-provoking.62
8.5.2 Restrictions, exclusions, privilege gaps and training gaps
Interview and survey participants reported a common perception that recipients of the new B
licences found their former licences had been degraded in status, because they were no longer
“full” licences but were explicitly “restricted”, in that the licence holder was not permitted to
exercise privileges across the full range of categories to which the new B licence applied. The
new B licences not only required a higher level of theoretical knowledge, but also that the latter
60
Civil Aviation Safety Authority (CASA), 2014e, GM 145.A.30 (f) p. 27.
61
62
Australian Government, 2014, pp. 95-6, 104.
124
be spread across a broader scope of licence categories – in the case of the B1 licence, across
airframe, engine, and electrical categories. Where the former CAR 31 licence holder’s privileges
did not cover a particular category, s/he was “excluded” from exercising them. This was noted
on the licence, and in some cases these exclusions were voluminous. Although Manufacturing
Skills Australia (MSA) quickly developed “skill sets” – or competency standards which went to
most of the common exclusions, and against which a licence holder could undergo recognition of
prior learning (RPL) or “gap training” – such gap training and RPL had to be delivered by a Part
147 MTO and was therefore expensive. Some LAMEs reportedly decided not to undergo the
“gap” training, and their licences were therefore “degraded” (in terms of their previous status as
“full”) and did not command the same premium on the external labour market as previously,
especially in comparison with overseas “full” EASA licence holders. It also correspondingly
decreased the availability of appropriately licensed LAMEs in some categories.
This project has allowed an estimate of the size of the training gap across the labour force in at
least the most significant categories. The project survey was conducted as the new regulations
were implemented (in 2012/13), and we received 579 useful responses to our questions about
what categories of licence respondents held. The discussion here is confined to the case of B1
licences. From Table 8.2, it can be seen that 346 of 579 LAMEs (57.8%) held privileges in the
engine and airframe categories – but did not have endorsements in the electrical category. Their
B1 licences were issued as partial – “restricted”, with exclusions to be removed by gap training
and/or RPL assessment. To the extent that the responses were representative, this suggests that
a significant training gap has emerged across the occupation, in the course of implementing the
new CASR licensing regulations.
Table 8.2 Frequency of licence combinations, survey of AMEs and LAMEs, Australia, 2012–2013
(n=708)
Licence Type
N
Engine & Airframe only
346
EIR only
133
Airframe only
25
Electrical & Instrument + Engine & Airframe
18
EIR + Engine & Airframe
15
Electrical & Instrument
13
EIR + Airframe only
1
Engine only
10
Radio only
8
Electrical + Airframe & Engine
4
Electrical only
3
EIR + Engine only
2
Electrical & Radio
1
Total
579
Source: Project Survey of Aircraft Maintenance Engineers, 2012-13
A remedy cannot be found simply by removing all exclusions from a former CAR31 licence, as
this would not provide the full theoretical background implied by the possession of a B licence
that requires a Diploma level qualification – there is a corresponding gap in terms of training
hours between CIV and Diploma of some 1,000 training hours (see next chapter). As explained in
the following quotation from an experienced training manager:
125
We’re now in a position where you’ll find that people that have gone through,
done their apprenticeship - or currently doing apprenticeships - haven’t even
started basics. It’s like we’ve got a generation of AMEs that aren’t even suitable
to become LAMEs - not without a great deal of effort… There is a generation of
them that haven’t kicked off - they have to go back to TAFE and undergo an
RPL process in which case they then have to probably redo their examinations
in a number of cases.63
8.5.3 Overseas recognition
New Australian licences were not automatically recognised in Europe and in some other
jurisdictions. As the ALAEA notes64
Despite both Australia and the EU having maintenance engineer licences based
on the same ICAO standards (and the professional standards of the licences
being equal) the EU will not recognise the qualifications of the Australian
engineers and requires them to recomplete their entire professional training if
EU accreditation is sought.
Australia, on the other hand, fully recognises the EU licence qualification and,
subject to a minor legislation/difference exam, issues EU licence holders with
an equivalent Australian Part 66 licence.
Two points can be made about this. First, the ASRR argued that it had always been unrealistic to
expect the new licences to be automatically recognised, in Europe or elsewhere, without
appropriate intergovernmental negotiations.65 Despite the apparent assurance of mutual
recognition in Article 33 of the ICAO Convention, such recognition generally does not occur
today except through specific undertakings made in bilateral or multilateral agreements. This is
presumably because of the “equal to or above the minimum standards” requirement that
appears later in the same Article, and given what we have learned about the widely varying
standards of training and certification across the world, we would certainly not recommend that
national aviation authorities (NAAs) relinquish the right to make that judgement for themselves.
However, given that CASA would have been well aware of this requirement at the time it issued
its RIS (2010), it might have been reasonably expected to make or at any rate recommend
provision for negotiating such mutual recognition agreements, where they did not currently
exist, before citing international transferability of the licences and qualifications as a selling
point for the maintenance reforms.
More importantly, the Australian training system struggles to incorporate the EASA training
requirements that underpin the new licences – particularly the theory modules, and the higher
numbers of training hours required for a diploma level qualification. Moreover, taking a CAR31
licence, and removing any exclusions through competence-based assessment, still does not
supply the essential theoretical background. Thus the question of “equivalence” of current
Australian training with EASA training remains to be addressed. While Australian licences and
training were equivalent to world’s best practice some years ago, Australian training now
appears to be falling below that standard. Thus there is no reason why recognition would be a
reasonable expectation.
63
Interview, Training Manager, MRO, 2011.
64
Australian Licensed Aircraft Engineers Association (ALAEA), 2014c, p. 8.
•
65
126
Timeliness: The National Aviation Policy of 2009 Flight Path to the Future envisaged that “the
suites of regulations relating to licensing, aircraft maintenance and flight operations standards”
would be finalised by the end of 2010.66 Yet at time of writing (June 2015), the reform program
was far from finalised, with the licence structure for GA still under consultation, though
reportedly much closer to resolution.67
8.6 General aviation and small aircraft licensing (SAL)
Small plane licensing, in the GA sector, has proven to be difficult for the CASA RRP and a final
resolution has been deferred to 2019. Until then, the old route of gaining licence privileges –
self-study, CASA Basics exams and demonstrated experience – is still open for exclusion removal
and for small plane licensing.
The fundamental issue is whether the aircraft maintenance licensing system should continue to
cover both large and small planes, allowing for career progression and labour mobility between
GA and RPT, or whether there will be in effect two licensing systems, with different
qualifications, that apply to what may become increasingly separate labour markets. This report
argues that there is a strong case for retaining a single licensing system, underpinned by highquality training and qualifications, and generating multiple career path possibilities, including
upward progression, as well as movement into the new job roles that have been generated by
the EASA system. In the short term, the challenge is that, for much of the GA sector, the skills
required in GA maintenance today are significantly different from those of RPT.
An AME in GA will have to work across a greater range of aircraft, and a LAME will be licensed to
sign off on essentially similar tasks on a greater number of aircraft. In some parts of GA the most
common aircraft types and models use piston engines and traditional technology – metal or
(with decreasing frequency) wooden airframes, direct mechanically actuated controls, and
discrete instruments, no longer common outside the sector. In addition, documentation is less
comprehensive, placing a greater premium on self-reliance and experience to guide practice.
Thus a person starting a career in GA today requires a range of skills, with the additional
capability to extrapolate and think by analogy across a wide range of aircraft, sorting out
problems, sometimes by trial and error, but mostly on the basis of their acquired knowledge of
how aircraft and components worked. A number of GA employers interviewed for the project
lamented the absence of such hands-on abilities in apprentices who had come out of more
recent, airline-oriented formal training. This is one reason why some advocates, including
Aviation Maintenance Repair and overhaul Business Association (AMROBA),68 favour a separate
GA licence following the old CAR 31 or possibly resembling the licence systems in other
countries, like the Federal Aviation Administration’s (FAA) airframe and powerplant (A&P)
model, or the New Zealand (NZ) model.
However, there are several arguments to encourage a single licensing scheme. First, the
distinction between the two sets of skills cannot be captured simply by the size-based definition
(up to 5,700 kg MTOW used to separate GA out from commercial aviation, since many larger
planes still in service require the old skills to keep them airworthy, while there are an increasing
number of planes below the 5,700 kg dividing point which have composite airframes, glass
66
Australia, Minister for Transport and Regional Services, 2009, pp. 104-105.
67
Civil Aviation Safety Authority (CASA), 2012a.
68
Aviation Maintenance Repair and Overhaul Business Association (AMROBA), 2014b.
127
cockpits and other up-to-the-minute technology.69 Moreover, problems arise at the margins,
since the weight demarcation has shifted from 8,000 kg, meaning that a number of planes that
were formerly maintained under the group system of licensing, now require type ratings and
special licence privileges.
Second, in the future there will be a need for much greater specialisation across the industry,
and much more agility at the level of individual businesses and individual workers to move
across the different segments as demand changes. This would seem to imply a multiplicity of
specialised licence types operating in distinct career silos; and an integrated licensing system
with a common qualification base which provides a basis for such mobility without the need to
retrain from scratch. This implies an approach to continuing training which allows LAMEs to
upgrade their qualifications and license ratings rapidly, in a modular fashion, as the composition
of the fleet changes.
The EASA system may be better suited to these developments than the CAR 31 system it
replaced, in that the large dose of theory acquired at the front end of a person’s working life,
reflected in broad licence categories, can be tailored through modular “type” training across a
large number of specialised complex aircraft and systems. Yet challenges exist at the division
between “large” and “small” aircraft, as explained above due to the mistaken assumption that
automatically equates size with complexity, and these remain a challenge even for EASA itself.
EASA has gone some way towards developing a separate licensing system for GA, including a B3
licence that applied to aircraft between 2,000 kg and 5,700 kg MTOW. This was approved by
EASA, and legislated by the European parliament. It is not clear how widely the B3 has been
taken up within Europe, but the issue is obviously still a vexing one for EASA, which has
announced in its “GA Road Map” and a new Notice of Proposed Amendment (NPA) about the
possibility of adapting the B2 licence for small less complex planes.70 GA was the central theme
of EASA’s 2014 Annual Safety Conference.71 Australia should keep a close eye on these
developments, and should make sure its licensing structures and the underlying training do not
stray too far from any template emerging in Europe – if only to ensure that its training products
become more widely marketable internationally, and its engineers globally employable.
It is disappointing that CASA appears to be moving in the opposite direction. In 2006 CASA issued
a Notice of Proposed Rule Making (NPRM 0604MS), which introduced maintenance regulations
based (in some aspects, loosely) on the EASA system, and foreshadowed further work on “a
small aircraft licence structure to mesh with and supplement the A/ B1/B2/C licence
structures”.72 Options examined included retaining the CAR31 structure for small aircraft,
applying the B1/2 structure to small aircraft, adopting the EASA B3 licence, and permitting GA
licence endorsements to be granted by approved AMOs.73 From May 2007 to March 2008 a B3
licence proposal was generated and circulated among key stakeholders for comment, but the
69
Nevertheless, as Table 3.3 indicates, over half of Australia’s 8,192 CASA-registered helicopters in 1992
were under 5,700 kg MTOW and built after 2000: while mostly small, simple and piston-engined, many
have new design features such as hydraulic flight controls, composite construction, or advanced avionics,
a(Airliners.net.au, 2015). There are also 564 turboprops and jets up to 5,700 kg MTOW on the CASA
register, 201 of them built after 2000. In addition, there were 1,289 small planes less than 10 years in age,
and presumably employing new technology.
70
European Aviation Safety Agency (EASA), 2015.
71
European Aviation Safety Agency (EASA), 2012; 2014b.
72
Civil Aviation Safety Authority (CASA), 2009.
73
Australian Licensed Aircraft Engineers Association (ALAEA), 2009, 2013.
128
initiative was terminated as the process apparently became too complex and difficult.
Interestingly, the proposed structure of a B3 (Mechanical) and B4 (Avionics) licence bore little
resemblance to the EASA B3 and B4 categories.
CASA restarted the process in December 2012,74 with a new discussion paper apparently in
response to a new ICAO policy encouraging competency-based training and modularised
licences.75 The Discussion Paper rejected the terminology and structure of B3 and B4 but
retained the B1/2 licence with specified groups which seemed to ingeniously combine the CAR
31 and CASR Part 66 licence structures. But it added the possibility of a small plane licence which
would require the candidate to acquire a licence, with full CRS endorsements, across all three B1
categories, in two years. In a more recent NPRM (1310SS, September 2014)76 it advocates a
small plane licence which would be available to graduates of the Certificate IV in Aeroskills
(Mechatronics) after two years of study and experience. The proposal also provides for the
equivalent of a Category A licence for Small Planes – that is, to perform and certify for limited
tasks known as “elementary maintenance”. The structure would replicate the RPT B categories,
but with a Small Plane endorsement – for example, B1.1 SAL. It would also contain the modules
of the CAR 31 Group structure.77
The ALAEA in its response,78 argued that the “small aircraft licence” should be included on an
existing B licence as an endorsement or rating, not a separate licence. The base qualification for
a licence should allow the possibility of acquiring the necessary theoretical knowledge in
“chunks”, which would articulate towards the Diploma,79 (not Cert IV) and with additional
category training to ensure that all three categories (airframe, engine, electrical) are adequately
covered. Subject to these and other qualifications, ALAEA has broadly endorsed the new CASA
NPRM. By contrast, AMROBA has canvassed, alternately, a version of the FAA A&P mechanic and
Inspection Authorisation, or failing that a complete reversion to the CAR31 licences and group
ratings, or even drawing on the NZ system. AMROBA has in addition produced several discussion
papers, including specifications for a future aircraft maintenance training system, which will be
partially evaluated in the next chapter. 80 Sensibly, it proposes that the increased training load
imposed on the system should be met by rejecting CASA’s prohibitions on self-study and its
commensurate requirement that people seeking a diploma must undertake category training
through a Part 147 organisation. This would move Australia back into line with EASA itself in this
respect, raising the question of why the option of self-study was ever deleted?
8.7 Discussion and conclusions
The introduction of the EASA-based licensing scheme disrupted the system of work organisation
and skill development around which the industry and the training sector had consolidated. The
74
Civil Aviation Safety Authority (CASA), 2012a.
75
Subject to significant differences between what international agencies mean by CBT, and what is meant
in Australia (see Chapter 9).
76
Civil Aviation Safety Authority (CASA), 2014d.
77
Civil Aviation Safety Authority (CASA), 2014d, p. 15.
78
Australian Licensed Aircraft Engineers Association (ALAEA), 2014c.
79
It has emerged that, according to some trainees who are caught by the change in arrangements, that
the new MEA15 training package does not contain diploma level piston engine (B1.1 and B1.4)
competencies, so it is clearly being anticipated that the Diploma level qualification covering both GA and
RPT will not proceed. We define this controversy as beyond the bounds of this project, noting simply that
the controversy proceeds.
80
Aviation Maintenance Repair and Overhaul Business Association (AMROBA), 2014a, 2014b, 2014c.
129
reasons for doing so appear in hindsight to be fundamentally sound, in that Australia was always
going to have to align itself with one or other of the major regulatory blocs, although the
reasons for preferring EASA over FAR remain controversial, and the handling of the process left
much to be desired.
As the chapter has argued, the processes have opened the way to slippage of certification work
from licensed to unlicensed personnel, something which has its roots in the industrial politics of
Europe at a time when EASA itself did not yet exist, and also in the industrial relations of
Australia’s airline industry. The emerging consequences have implications for Australia’s
compliance with ICAO Annex One, (as the recent Walker Opinion found), and has implications
for the organisation of aircraft maintenance work and safety. It is important that any questions
about the proper mechanism for ensuring the quality of aircraft maintenance be resolved by full
and open public discussion, not by regulatory slack and confusion. This is why the ASRR’s
proposal for plain language re-writing of safety regulations, in a “third tier”,81 is so important,
and why this project makes a similar recommendation with respect to the CASA RRP
components we have examined – Parts 42, 66, 145 and 147.
It is in this respect that the implementation of the EASA-based system in Australia has so far
proved less than satisfactory. Part of the problem undoubtedly lies in the sheer difficulty of
adapting the skills identified in the CAR 31 licence categories to fit the different structure of the
EASA B licences and the new underlying qualifications. Even acknowledging this constraint,
however, it is hard to defend the absence of practical support for the transition between
systems. We have not been able to quantify precisely how many workers licensed under the old
system found themselves prevented from exercising their full potential productivity (or in some
cases, from working at all) in the immediate post-transition period, but the fact that any found
themselves in this position is an indictment of the process, as is the way so many appear to have
been thrown back on their own resources and on the mercies of the training market to make up
for the gaps between their existing skill base and the requirements of either new licence
category. And though it appears that many of the teething problems with the system itself have
now been resolved, the serious problem of the transferability of Australian licences and
qualifications to other international jurisdictions remains.
Notwithstanding the claimed virtues of the previous CAR 31 system (which, incidentally, not all
policymakers agree) there is considerable merit in pursuing harmonisation. Greater systems
integration in new aircraft increases the premium attached to a greater scope and level of
theoretical knowledge. Moreover, once again apart from certain difficulties in implementation,
the merging of 5 trade streams into 3 (and ultimately 2) makes sense – and indeed was
foreshadowed by developments in qualifications that predate the EASA reforms. The
intersection of the Part 147 reforms with the aircraft maintenance training system are the
subject of the next chapter, but we note that the manner in which responsibility for assuring
that necessary theoretical knowledge was appropriately built into the qualifications that
underpin licences was cavalier, to say the least, in view of the known quality problems in the
Australian VET system and the evident inability of the current regulatory scheme to control
them.
Another problem which has not been resolved by the EASA system even in the continent of
origin, is the issue of small plane licensing. Ferment around this issue continues. We have
defined it as beyond the bounds of the present project to attempt to suggest a comprehensive
solution. We have, however, made several general points. First, that a new licence structure
81
Australian Government, 2014, pp. 2, 104.
130
should allow a person to move from one sector to another – it should support orderly career
progression as far as possible, with flexible qualifications underpinning any new licence
structure. Second, any new licence structure and associated qualifications should as far as
possible harmonise with EASA. It is no longer possible or desirable for Australia to have its own
system, separate from the rest of the world if, as we will argue in Chapter 10, a looming skills
shortfall provides opportunities for Australia to market training products. Third, the new GA
licence must be capable of considerable flexibility at the margins, allowing for the creative use of
both “group” and targeted type ratings below the sub-5,700 kg MTOW dividing line.
For now, therefore, and probably for at least the next ten years, the licensing system must be
able to accommodate conflicting requirements. On the one hand, it must be future-compatible
to the extent that it allows new entrants to the workforce a feasible and affordable path to
reputable and functionally adequate licences – based in turn on high quality qualifications –
which will enable them to step into the places of the current generation. On the other, it must
be capable of ensuring that the huge base of expertise embodied in the existing LAME workforce
remains available to MROs and aircraft operators, and that this workforce has accessible,
affordable paths to developing its knowledge in line with developing technology and changing
practices, together with an occupational structure that provides adequate recognition and
incentives to justify the time and effort involved in doing so.
131
RECOMMENDATIONS
•
RECOMMENDATION 9: That Australia reaffirm its commitment to state-based licensing as
the most effective mechanism for ensuring independence and quality in aircraft
maintenance certification, and remedy any loopholes in the existing regulation which permit
its substitution by a company authorisation scheme.
•
RECOMMENDATION 10: That the interactions between the Fair Work Act and the Civil
Aviation Act be examined with a view to resolving the conflict revealed by the Sunstate
decision in a way that safeguards the statutory independence of the licence holder.
•
RECOMMENDATION 11: That the issue of international transferability and mutual
recognition of qualifications and licences be explored and resolved at both the national and
the intergovernmental level, including urgent action to ensure that Australian licences are
genuinely equivalent in their knowledge content to those issued by EASA and other
jurisdictions which have adopted the same model, and negotiation of bilateral recognition
arrangements (with appropriate safeguards) where these do not currently exist.
•
RECOMMENDATION 12: That the parts of the CASRs relevant to maintenance licensing be
rewritten in plain language as recommended by the Aviation Safety Regulation Review, with
a view to resolving ambiguities in key terms which are a potential source of confusion
and/or conflict between interest groups.
•
RECOMMENDATION 13: That the minimum qualification requirement for an A licence be set
at the same minimum level as required by best-practice EASA members (i.e. Certificate III),
and that this licence become part of an articulated progression of licence categories built
around a common training framework and qualification structure.
•
RECOMMENDATION 14: That the arrangements for a new small aircraft licence be finalised
as quickly as possible in order to permit GA operators and MROs to recommence recruiting
for LAME vacancies, but in a way that allows a seamless pathway between small aircraft and
RPT aircraft, while making provision for licensees to train in and be endorsed for new small
aircraft technology as it comes into wider use.
This should include provisions for smooth transition from Certificate IV to
Diploma, group category endorsements which could be added either to a
Diploma-based B licence or to a Certificate IV-based SAL, type ratings for
selected small planes, and an exercise to rate all small planes (including
retrofitted ones) for licensing purposes in terms of their technical
characteristics and associated maintenance skill sets.
132
Chapter 9 Training and Licensing Reform:
Implications for Workforce Capability Development
9.1 Introduction
Building workforce capability will be crucial if Australia is to meet the challenges posed by the
future global shortage of skilled licensed/ aircraft maintenance engineers (L/AMEs), to be
outlined in Chapter 10. The numbers of annual training graduates, and the quality of training,
both need to be addressed if Australia is to meet its own needs and help build aircraft
maintenance and maintenance training as significant components of its export industry. If this is
to happen, we must move quickly to resolve training issues generated in part by the efforts at
European Aviation Safety Agency (EASA) harmonisation identified in Chapter 8.
Domestically, the escalating world shortage of skilled maintenance personnel will leave Australia
increasingly reliant on its own internal resources to cover its requirements for maintenance
skills. With the loss of existing skill likely to occur as a combined result of workforce ageing,
headcount reductions and some experienced workers leaving the industry in search of more
rewarding and less stressful work, the capacity of the training system to produce a quality
replacement workforce will become increasingly critical as fewer experienced workers remain to
guide new graduates. Additionally, in a world of looming skills shortages, aircraft maintenance
training has the potential to become a very large and lucrative export industry for Australia, as
well as providing employment paths making full use of the skills and knowledge of those L/AMEs
who are currently suffering interrupted careers.
This chapter seeks to analyse the impasse into which Australian aircraft maintenance training
appears at the moment to have fallen. In particular, we argue, Australian aircraft maintenance
training has fallen well below the level of activity required to maintain a skilled labour force even
at its present level, and it is increasingly apparent that it may not be fully compliant with
international standards. The licensing reforms have increased the knowledge content and raised
the level of the qualifications which underpin the main Australian aircraft maintenance licences.
But capacity to meet these requirements has been hampered by disconnects between licensing
requirements and key components of the current Australian vocational education and training
(VET) framework for delivering training and for assessing the skills and knowledge needed to
guarantee safe and competent maintenance performance.
Training Package development, within a tightly-prescribed competency-based format, has had to
grapple with three issues. These are:
•
The need to “patch” the LAME privilege gaps created by the transition from Civil
Aviation Regulation (CAR) 31 to Civil Aviation Safety Regulation (CASR) Part 66;
•
The delayed finalisation of the general aviation (GA) licensing requirements; and
•
The transfer of category licence knowledge training and assessment from the Civil
Aviation Safety Agency “CASA Basics” system to VET providers operating within a
training market.
Standards and assessment criteria, specified in terms of competencies, are set by industry skills
councils, but responsibility for developing curriculum and delivering training and assessment
falls to training providers. There is some concern as to who is responsible for safeguarding the
depth to which underpinning theoretical concepts are being taught, and as to whether the
training market, which may tend to conflate concepts of “cost” and “value”, is conducive to the
fostering of either in-depth theoretical knowledge or highly developed hand-skills. Meanwhile,
new apprentice intakes have sharply declined, as transition problems have been exacerbated by
133
the failure of maintenance repair organisation (MRO) employers, State training authorities and
the Commonwealth to provide support for the additional up-front training required by the new
licensing requirements.
9.2 A decline in training capacity
The primary concern is that the capacity of the training system has fallen well below even the
replacement need for new qualified entrants, leaving aside for the moment any questions of
their quality (Figure 9.1). Admittedly the number of apprenticeship completions more than
doubled between 2007 and 2013. However, this increase reflects a large spike in
commencements in 2008 that has since been working its way through the system, with its effect
now practically exhausted. Completions peaked in 2013 and were running almost 30% below
that peak a year later. If we look at commencements instead, we see a steady fall over the last
six years, with the total for 2013 less than half that recorded five years earlier, although
numbers recovered slightly over 2014.
Comparing the two graphs in Figure 9.1, three differences become obvious once the
contribution of Defence is excluded. First, the curve for completions peaks far earlier, and
though a second, lower peak appears in 2014, the marked surge in aggregate completions after
2010 is due largely to a big increase in Defence activity.1 Figure 9.2 illustrates this pattern more
clearly by tracking the overall numbers in training, in the process showing that the combined
civilian and Defence training systems had the capacity as recently as 2012 to handle over 2,000
apprentices a year, most of them studying at the Certificate IV level.
Second, the drop in civilian commencements since 2008 is both less even and less pronounced,
but the figures for 2013 and 2014 still stand out as the lowest since statistics have been available
at this level of disaggregation. The slight upturn in 2014 cannot yet be taken as evidence of a
sustained recovery in activity, and none of the qualitative evidence from industry sources
suggests that such a thing is likely in the near future.
The third difference concerns the trend in wastage (the combined impact of apprenticeship
cancellations, withdrawals, suspensions and expiry). Once outside the Defence environment,
where apprenticeship is generally more tightly managed, more closely linked to a postcompletion job, and conducted in a more disciplined culture, wastage emerges as a growing
concern. While its rise since 2007 has been relatively gentle and its 2014 level is by no means the
highest on record, it has grown steadily instead of falling in line with the numbers in training as
might have been expected. In each of the last two years, the number of civilian apprentices lost
through wastage was equivalent to nearly 60% of the number who joined the system through
commencements in the same year. As a proportion of all civilian apprentices in training at all
points of the cycle (Figure 9.3), it had reached nearly 20% in 2014.
1
The initially mystifying fluctuations in Defence apprenticeship activity appear to be due to specific
circumstances in that sector. In the first place, a high proportion of the maintenance which had
traditionally been carried out in-house by uniformed personnel began to be outsourced to civilian
contractors from the late 1990s on. This led to a sharp drop in the requirement for recruitment to
uniformed maintenance areas, particularly apparent in the early 2000s when apprenticeship intakes
declined virtually to nothing. Later in the decade, a large number of senior NCOs in the remaining
uniformed workforce retired or left the services, creating a demand for more training to replace them. As
this gap in the workforce was filled, apprenticeship commencements declined sharply again to meet the
lower long-term intake requirements, currently around 200 a year. (Source: personal communication from
MSA)
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Chapter 9 - Training and Licensing Reform: Implications for Workforce Capability Development
All AME apprenticeships
900
800
700
600
500
400
300
200
100
0
2003
2004
2005
2006
2007
Commenced
2008
Completed
2009
2010
Wastage
2011
2012
2013
2014
2013
2014
Net recruitment
Civilian apprenticeships
450
400
350
300
250
200
150
100
50
0
2003
2004
2005
2006
2007
Commenced
2008
Completed
2009
Wastage
2010
2011
2012
Net recruitment
Source: NCVER Apprentices and Trainees 2
Figure 9.1 AME apprenticeships by status, 12 years to December 2014
The reasons for this high relative level of wastage cannot be determined from the statistical
sources, as the relevant NCVER (National Centre for Vocational Education Research) figures are
issued only irregularly and are not available at this level of disaggregation. It would seem
reasonable to speculate that they could result from one or more of declining job prospects, a
decline in the quality of candidates, or a decline in the perceived effectiveness of the training
itself. The last of these is our concern in the remainder of this chapter, though it cannot be
linked directly to the rise in dropouts from the evidence currently available.
2
Data from this source, though highly regarded and used by most other labour market analysts, show
quality problems (specifically, apparent errors in coding) which mean there is a risk that the raw statistics
may significantly either understate or overstate the actual number of apprentices in this occupation in any
given year. These errors limit the confidence with which we can present findings based on this series, a
qualification which should be borne in mind both in this chapter and in Chapter 10.
135
2500
2000
1500
1000
500
0
2005
2006
2007
2008
2009
Defence
2010
2011
Civilian
2012
2013
2014
Figure 9.2 Apprentices in training by sector, average over full calendar year, 10 years to
December 2014
20
18
16
14
12
10
8
6
4
2
0
2005
2006
2007
2008
2009
Defence
2010
Civilian
2011
2012
2013
2014
All
Figure 9.3 Loss through cancellations/withdrawals, expiry and suspension as a proportion of
number in training, by sector, 10 years to December 2014
There appears so far to be limited support for reducing the recruitment deficit. The crisis within
the formal training system – exemplified by the collapse of activity in leading-edge Technical and
Further Education (TAFE) institutions such as Kangan-Batman TAFE which once set national
standards in the training of aircraft maintenance personnel – combines with the decline in
activity at the industry level to compromise Australia’s capacity to bring its output of skilled
labour back up to acceptable standards. With many of the most active maintenance workshops
now closed, the opportunity to provide workplace experience is becoming scarcer.
At the same time, the continuing reduction in the experienced workforce in the industry is
leading towards the decay of a resource of practical knowledge which in better times would
have been available to contribute to the practical learning of a new generation of apprentices.
An impressive body of such knowledge still remains in the active Australian workforce, but it
needs to be brought up to date with the requirements of a future global workforce. Aside from
line maintenance, the heavy maintenance on newer, more sophisticated types like the A380
136
appears to have been scheduled to go offshore before a significant number of Australian aircraft
engineers have acquired the relevant knowledge, whereas the models and types on which
Australians have gained most of their experience will be well into the aging process by the end
of this decade. With reduced numbers of experienced workers to provide mentoring, or
opportunities for workplace experience in Australia, on the new generation of commercial
aircraft designs, it will be even more difficult for Australia to generate a future-compatible
maintenance workforce.
Further evidence about skills shortages has emerged from the survey of MRO business owners
described in Chapter 3 and Appendix 1. Of 73 respondents, mainly from the GA sector, 30, or
42%, had had a skilled vacancy in the past year (2012-2013), and of those who had a vacancy,
53% had found it hard to fill. The main reasons cited for difficulty in filling vacancies were lack of
applicants with specific skills relevant to the aircraft/component types (19 responses) and not
enough applicants with current licenses, certifications or licence privileges required for the job
(18 responses).
A further statistic is also of great concern. As was noted in Chapter 8, the base qualification
required for a B licence is now a Diploma. However, in the four years to September 2014, only
90 apprentices commenced study for a Diploma (83 of them in the year to September 2012), and
of these only 39 had completed the qualification, with another 37 still in training. More
alarmingly, there had been no new commencements at this level since June the previous year,
and 30 had withdrawn or cancelled in the June quarter 2014 alone. Of all apprentices still in
training at September 2014, a full 97.6% were studying at the Certificate IV level.
As indicated in Chapter 3, Table 3.9, by 2015 there were only four CASA-approved maintenance
training organisations (MTOs) providing category licence training in Australia. The statistics
suggest a viability issue for the institutions to whom CASA has delegated approval for
administering licence assessments. There are thus question marks over the sustainability of the
system for generating an ongoing supply of LAMEs in Australia.
Thus on present indications (i.e. assuming completion within four years of commencement),
barely a dozen of all the AMEs who complete their apprenticeships on or after June 30 this year
are likely to have the minimum qualification which will be mandatory by then for a full licence to
certify work on large commercial aircraft, and the situation is unlikely to improve for at least
another three years unless a substantial investment is made over that period in bridging courses
to cover the gap. Since a Diploma is the mandatory requirement under the EASA scheme as well,
they will also find great difficulty having their qualifications accepted for employment in any
other country which follows the EASA system.
9.3 Training reform in Australia — implications for aircraft maintenance
On top of this very significant decline in throughput have come increasing concerns about the
quality of those graduates who still emerge from the system. The following sentiments, drawn
variously from structured interviews with employers and maintenance managers and
unprompted comments in the free-response section of our 2012 survey of AMEs and LAMEs
(described in Chapter 2),3 are typical:
3
See section 2.5.2. The survey had 708 respondents, of whom 57.2% were LAMEs and 12.5% were
aviation managers, operational managers or professionals.
137
We are now licensing people by having them put through a private enterprise
training organisation which has a vested interest in the result. A result
financially, not a result technically.4
The skills level seen lately has dropped, and if the rate and type of maintenance
memos is anything to go by, we are making basic mistakes, things that were
taught at apprentice levels.5
We have an AME who started his Basic exams. He failed the most basic Basic
three times. He sent his TAFE qualifications to an approved training
organisation for RPL and it came back with only a few modules to pass to
become a B2. The module he had failed three times wasn’t one of them.6
The apprentices are more concerned about filling in their journals than actually
learning anything on the job. Overall, their hand skills, knowledge and ability to
work under supervision is the equivalent generally of a first-year apprentice
under the previous system.7
I’m seriously concerned at degradation of the training … if you give them
money you get a certificate. I think it’s very much the same with this
maintenance training, you know, [name redacted] … does this training and it’s
such a hoax. A lot of companies won’t employ people out of there.8
The other major problem I can see, costs of skilling, enormous, absolutely
enormous. These lads, our apprentices will do so much, but... they’ve got to do
all the skilling up to a complex aircraft from what I can basically see, which
they’re not getting... covered by their local state government or TAFE.9
It is my opinion that the quality of graduates from schools such as [name
redacted] are on the decline, and under the new licensing system it worries me
that these new guys will be certifying for aircraft systems that they do not
understand. Studying for the CASA Basics was a tough process. Studying at
[name redacted] is an almost guaranteed pass and their bar is set too low and
the quality of applicants for apprenticeships these days is lacking.10
I feel the training received by today’s apprentices is lacking. They are taught a
lower basic skills and are generally taught to pass exams. They lack practical
experience too. Employers focus on people’s licences, not experience.11
That base skill shortage... the GA people saying that what they’re getting out of
the TAFE sector they’re not happy with. That’s pretty much across the board
4
Australian Licensed Aeronautical Engineers Association (ALAEA) Focus Group, 2009.
5
Survey Respondent, 10489.
6
7
8
9
Focus Group, GA Employers, 2011.
10
11
138
but I think it’s a - it’s now a generational thing where we no longer have that
basic hand skills training in the high schools.12
Most of these issues are not simply the result of specific training processes applied in the aircraft
maintenance occupations, but can be traced back to increasingly visible structural deficiencies in
the model of VET provision which Australia has followed since the early 1990s. We argue below
that the CASA RRP (Regulatory Reform Program) has exposed Australian aircraft maintenance
training to these systemic failures.
9.3.1 General background
The VET reforms that began in the 1980s were a response to the emerging need for a genuinely
national qualifications structure to support national markets for skilled labour. Australia’s
federal system of government has historically allocated most power over training and education
to the States and Territories. Each state has had its own Technical and Further Education (TAFE)
system, and its own State Training Authorities, which traditionally issued their own credentials.
Their sometimes very different approaches to training policy have posed problems for the
development of nationally portable qualifications. As will be discussed further in the next section
of this chapter, this was complicated by the need for the same training system to cater for the
needs of Defence maintenance personnel.
Up to the 1980s, most Australian training was built around the trades apprenticeship model, in
which young, usually male, apprentices served their time, received workplace training, and
attended technical colleges. Unions and the industrial relations system restricted trade entry
and helped regulate the quality and content of training and assessment. Awards preserved
industrial demarcations often along skill-based lines, defining the skill content of work and
reserving it for holders of certain qualifications.
1994 saw the introduction of a Training Market, in which State TAFE systems competed for
federal funding with private registered training organisations (RTOs), that were authorised to
provide both training and assessment as well as to award qualifications. The States agreed to
mutual recognition of qualifications, while the Federal government jointly set up the Australian
National Training Authority (ANTA), which administered a new phase of national regulation from
1994 until its abolition under a Coalition government in 2004.
Under current legislation, only RTOs can issue nationally recognised qualifications, but they do
so under conditions where, to a large degree, they effectively exercise quality control over their
own output. This makes the system highly reliant on the integrity and expertise of the individual
participants. As early as 2000, the market-based system experienced reports of rorting by some
private RTOs, including the issuance of false qualifications, highlighted in a Senate inquiry.13 The
Federal government in 2001 responded by creating an Australian Quality Training Framework
(AQTF) and by introducing new quality assurance standards for RTOs. Initially the standards were
administered and enforced by State Training Authorities with varying approaches, until reforms
of 2009 created a national regulator, the Australian Skills Quality Authority (ASQA).
Assessment has been identified as one of the key issues on which the quality of the system as a
whole depends. In 2008, the Organisation for Economic Co-operation and Development (OECD)
Review of Australian training commented on “the lack of standardised national assessments
[which] means that there is no standard to ensure that a particular set of skills has in fact been
12
Interview, Training Manager, 2011
13
Australia, Senate Employment, Workplace Relations, Small Business and Education Reference
Committee (SEWRSBERC), 2000.
139
acquired”.14 It is important to consider whether this comment applies to training in aircraft
maintenance — an area where tight regulation is important on safety grounds.
To gain and to maintain registration, RTOs need to meet certain standards issued by the
appropriate Minister. These are expressed primarily in terms of the qualifications required of
individual trainers and assessors. The first iteration of the AQTF in 2001 required that trainers
and assessors, in addition to being competent in the area of work they are assessing, be
qualified to Certificate IV level, modified in 2011 to “necessary training and assessment
competencies as determined by the National Quality Council or its successors” (p. 16, Standard
15.4). Anecdotal evidence suggests that learning time in training and assessor courses can be
quite varied, and may have diminished overall over time. In addition, a loosely worded clause
allowing qualified assessors, if they lacked the competencies they were assessing, to “work with”
people who had those competencies during the assessment process, led to assessors assessing
outside their area of competence. Assessment practice itself probably varies greatly, although
we know of no large-scale research on assessment practice in Australia.
We therefore examine evidence as to whether these general concerns apply to the training and
assessment practices required in aircraft maintenance, in particular to the development and
assessment of the higher level skills necessary for diagnostic and rectification work on complex
aircraft systems.
9.3.2 Aircraft maintenance training and assessment
In addition to the VET quality assurance framework just outlined, the training of aircraft
maintenance engineers, being safety-critical, is also regulated by CASA under CASR Part 147.
There are controls, governing specialised type training, and also governing the more
comprehensive category training that underpins it.
At present, it is of some concern that the CASA website lists only four organisations as having
transitioned to approval for category training — Aviation Australia and Aerospace Training
Services (both category and type), Kangan Batman, and Padstow TAFE (South West Sydney
Institute (SWSI)). Information suggests that this information may not be current in the case of
Kangan Batman, and that Padstow, who has been working closely with Tamworth TAFE, has
suffered from the Sydney decline in Qantas apprentices. We understand that Parafield TAFE has
Part 147 approval, although at the time of writing it was not listed on the CASA website as a Part
147 an approved category training provider. These small numbers are in themselves of concern
for the future supply of Australian AMEs and LAMEs. A further 12 Australian and 20 overseas
organisations (a mix of training providers, airlines and original equipment manufacturers (OEMs)
have type training Part 147 approval. On the other hand, there are 36 Part 147 organisations
providing type training, and, as Chapter 3 outlined, 11 of these are international OEMs.
The CASA Manual of Standards (MOS)15 governing maintenance training stipulates that any
organisation seeking Part 147 approval to carry out category training must also be a registered
training organisation (RTO), although an MTO that seeks approval only to conduct type training
does not need to be a RTO.
Thus the Part 147 approved MTOs providing category training are subject to regulation by CASA
as well as ASQA – the VET regulator. In category training, the requirements for assessment are
more closely aligned with the VET regulations. Ideally, a person performing assessments should
have the relevant assessment competencies specified in the Australian Qualifications
14
Hoeckel et al., 2008, cited in Guthrie, 2009, p.13.
15
Civil Aviation Safety Authority (CASA), 2011d; 2015g.
140
Framework, as well as the competencies being assessed. That is, they should be competent in
what they are assessing, as well as in assessment itself. However, the CASA regulations allow
that an MTO may appoint two persons to perform assessment, as long as one has the assessor
competencies, and the other has the competencies being assessed.16 It is worth noting that
allowing this separation has been seen as a weak point in the AQTF assessment regime.
Things are significantly different for type training, where the organisations providing it, although
regulated under Part 147, are not subject to the same VET regulations standards under the AQF.
There, an assessor is subject only to the rules of the MTO’s exposition, but must have the
vocational knowledge and skills, again as set out in the MTO’s exposition, that are being
assessed.17 In other words, there can be no separation between assessment competencies and
competencies being assessed – the system appears stronger in this respect.
Other requirements for category training include: provision of workshop access and quiet undercover facilities for theory training in classes of no more than 28, as well as the setting out of
staff/student ratios in the exposition. The MTO must provide secure office space for storing
records and assessments and a library containing relevant, accessible and up to date reference
material, including examples of maintenance documentation and technical information. An
accountable and responsible manager must have the designated role of overseeing resources
and compliance and must appoint a sufficient number of suitably qualified teaching staff to carry
out maintenance training and assessment in accordance with the MTO’s exposition, although it
may use another organisation to provide practical training and assessments if it has procedures
in its exposition detailing how this will occur. Teaching staff must undertake a professional
development course at least once every 2 years, covering current technology, practical skills,
human factors and training techniques.
In addition, for type training, records about instructors and assessors must be kept. The MTO
must include in its exposition a control procedure for the production, updating and distribution
of all maintenance training materials and provide to CASA on request: course plans with
specified content, assessment and recognition of prior learning (RPL) methods, as well as being
able to produce student records for five years. The MTO must establish in its exposition a quality
management system, including provision for an annual audit and remediation plan. An
assessment pass mark of 75% is required for each unit of competency in category training, or for
each element of aircraft type training. Results must be reported to CASA within 4 weeks, and
may include information on English language proficiency and understanding of airworthiness
management role. An MTO may assess a foreign licence or a Defence Force aircraft
authorisation for RPL, but must provide CASA with a statement of how the requirements
match.18
The questions to be determined are whether these requirements, particularly the audit
provisions, are sufficient safeguards of training and assessment quality, for both AMEs and
LAMEs, and why the rate of transition to Part 147 category training has apparently been so
apparently been so slow.
16
Civil Aviation Safety Authority (CASA), 2011d; 2015g, 147 A.106 (a) (b).
17
ibid., 147 A.106 (c).
18
Civil Aviation Safety Authority (CASA), 2015c.
141
9.4 Competency-based training (CBT) in aircraft maintenance
Competency-based training (CBT) was found to have strong advocates and detractors at all
levels of the aircraft maintenance training policy network. To some extent, controversy derived
from people talking past each other, as the term has acquired a multitude of nuanced, conflated
and even confused meanings since its implementation in the training systems of the UK and of
Australia. CBT has attracted a voluminous academic literature, much of it critiquing an earlier
“behaviourist” version, as it was known in Britain and Australia, that many trainers and training
administrators have actually abandoned, although these theoretical models often survive in
outdated regulatory, policy and other literature.
This “version” of CBT tends to prioritise demonstrated performance over theoretical knowledge.
Its critics have argued that the more the capabilities that CBT is called upon to develop and
assess, approximate those of professional work, the less approriate the competency model is.19
As Wheelahan and Moody have recently argued, skilled workers may need to be able to exercise
complex judgements, including performing diagnostic and analytical roles, and not merely
perform workplace tasks and roles that have been defined for them or are based on existing or
past practices.20 Echoing earlier calls to abandon the CBT approach21 they argue for a new
concept of “capability” to replace “competence”. This may be something to consider for the
future. But for now a version of CBT is being applied in the MEA Training Package and its
qualifications, for assessing not only theoretical knowledge but also diagnostic and rectification
work performed at Diploma level by a LAME. This recognises that there are multiple versions of
CBT – or, which is much the same point, the term “CBT” is applied to radically different
approaches to training, including some currently being deployed in the international sphere. We
will return to these below.
Some VET professionals in the aircraft maintenance field argue that we are now in a “mature,
competence-based system”22 that allows precisely this holistic assessment, while others
disagree. Critics see CBT as behaviourist, and argue that it fragments the assessment of overall
capability into a large number of independently administered assessments of individual
competencies. Yet the ability to do a complex job depends as much on the ability to select and
coordinate individual competences from a repertory, and apply them together in a work
environment, as it does on the worker’s skill at each element of the job. In recognition of this
problem, Manufacturing Skills Australia (MSA) has developed units of competence to address
coordination and diagnostics requirements of aircraft maintenance,23 although the extent to
which they guide the training and assessment practices in RTOs/MTOs must remain moot.24
19
Ashworth and Saxton, 1990; Jackson, 1993; Wolf, 1995.
20
Wheelahan and Moody, 2013:2.
21
The High Level Review of Training Packages (Australian National Training Authority (ANTA), 2004) also
questioned how well CBT could register “hard to codify” skills. Despite strong arguments for a shift
“beyond” CBT, the authors noted that such a change had few supporters in the Australian training
community.
22
Interview, Part 147 Training Provider, 2013.
23
For example, MSA argues that “In the diplomas leading to licence there are two units of competency
(MEA235 and 323) that aim to develop competency in fault diagnosis where progression from first
principles is necessary. This is beyond the CASA basics or the EASA syllabus requirements.” The following
example was provided:, “[O]ne of the examples against unit MEA323 required knowledge of the aircraft
refuel and fuel dump systems, the use of system simulator training boards to formulate a theory,
aerodynamic knowledge relating to wing tip vortices, followed by construction of a small rig that would
prove the theory and lead to the conclusion that the fault was a design problem and to the development
142
Where “demonstration of competence to the standard expected in employment”25 is the
touchstone of “competency”, it can be argued that how a person learned or acquired
competence, or how long it took them to do so, is unimportant. Some people are quick learners,
after all, and some teachers (and training providers) are more efficient than others. Risks arise
out of the principle that qualifications should not be granted on the basis of time served, i.e. a
specified number of training hours or years in apprenticeship.
However, under a funding model which provides strong incentives for the provider to put each
intake of trainees through the course as fast as possible, certify them, collect their subsidy and
move on to the next intake, there is a risk that the flexibilities inherent in this approach will be
exploited to push trainees out into the labour market before they are fully ready to practise the
occupation in a workplace. Some constraints remain when the training is governmentsupported, since State funding rules still specify the number of training hours which may be
funded towards the achievement of a given qualification – a point examined in more detail
below. An alternative concept of CBT has emerged in an international movement to transform
aviation training in general, including aircraft maintenance training. This movement, discussed
further below combines the concept of CBT with the “instructional systems design” approach to
training, which is more prescriptive about the choice of training methods, in an attempt to
increase training efficiencies.
9.5 The changing face of aircraft maintenance training
Australia’s training system needs to accommodate the requirements of AMEs of the Defence
forces alongside those in the civilian sector. The former operate under a somewhat different
regulatory system outside the provisions of the Chicago Convention (which explicitly excludes
state aircraft) and which features a hierarchical structure of supervisors and inspectors reflecting
military rankings. There is no Defence AME licence. Transfer from Defence to civilian work on
any scale has, for many years, been limited by lack of commonality in the aircraft AMEs worked
on, and the necessarily dissimilar experience gained. Yet there has been considerable
outsourcing of aircraft maintenance from Defence to civilian contractors, and as the Defence
forces shift from purpose-designed military transports, search and rescue aircraft, etc, to new
types based on what are essentially current-generation civilian platforms, transfer between
them will tend to become easier provided a common knowledge base, qualification structure,
opportunities to gain experience, and transition arrangements reflecting civilian qualification
requirements based in licensing requirements can be developed. The recent changes in the
civilian licence structure, and, in particular, the requirement for a Diploma qualification to
underpin a B licence constitutes a challenge.
Defence installations and civilian AMEs working on defence aircraft need to observe the
requirements of the Defence Technical Airworthiness Framework, (sometimes, confusingly,
alongside a requirement for a plane to be certified for return to service by a civilian LAME),
of a modification to overcome the problem. There will be many examples that experienced maintainers
could identify and their use depends on the training organisation being able to muster the manuals and
data sources required for the scenarios.” Correspondence from Manufacturing Skills Australia, November
2015).
24
In a sense, all behavioural assessment is based on the assumption that the behaviour will be replicated
in practice, just as all written assessment is predicated on the assumption that understanding will be
applied in practice. The more complex the task requirement, for example diagnostic work, the more risk is
involved in these assumptions.
25
Wolf, 1995; Ashworth and Saxton, 1990; NTB, 1991; Wheelahan and Moody, 2013.
143
outlined in the Defence document DEF9022.26. These requirements predate the implementation
of the EASA licensing system, and are in any case significantly different from the ICAO Annex
One based model in that they do not reserve the role of sign off (for safety critical processes) to
a LAME. Rather, and significantly, an AME qualified at Certificate IV level, with appropriate type
training and experience, can perform this role provided they have not participated in the work
process they are signing off, although releasing the plane to service is usually done by the
Maintenance Manager. Our limited evidence suggests that in few cases are Defence AMEs
qualified to what is colloquially called “Certificate V” level – that is, with electrical as well as
mechanical qualifications – corresponding to the CASR B1 licence structure. This creates transfer
difficulties for defence AMEs who have been performing as “independent inspectors”,
effectively undertaking the certification work of ICAO Annex One LAMEs, and who are seeking
“certification” work (that is under ICAO preserved for LAMEs) in the civilian sector. In turn this
works against the interests of both efficiency and resilience, by failing to ensure that the civilian
workforce can function as a reserve source of labour for Defence in times of shortage, and viceversa.
Prior to the 1990s, the aircraft maintenance occupation, in both civilian and Defence sectors,
was divided into five trades – airframes, engines, radio, instrument, and electrical – and these
were reflected in the civilian licence structures. From 1989 to 1992, a National Aeroskills Project,
with involvement of both civilian and Defence sectors, undertook a rationalization of the skill
and knowledge deemed necessary for the qualifications, and while the structure (if not the
content) of the trades and licences remained virtually the same, a major outcome of this project
was the National Aeroskills Curriculum (NAC 95). This was a true curriculum document. It was
derived from the aviation sector as a whole, and did not use competency-based training and
methodology. NAC 95 rationalised the structure of the five trades into three – mechanical,
structures, and avionics. It was adopted by Defence and became an ADF (Australian Defence
Force) standard, but was rejected for civilian purposes by the then Australian National Training
Authority (ANTA) in 1997 on the grounds that it was not competency-based. NAC 95 provided
the knowledge base for the first MEA training package in 1997, although it was subsequently
dropped from this role. By this time a national curriculum-based approach was no longer
permissible because of the legislative separation between responsibilities for the definition of
training outcomes and the design of curricula.
9.5.2 Training and licensing under CAR 31
At the time of the 2011 Census, there were still 1,589 people giving their occupation as AME
(11% of those employed in the occupation) whose qualifications were listed as “not applicable”,
suggesting that they came to the job without any formal post-school qualifications. But the most
common path in more recent years was first to gain a basic AME certificate through a four-year
apprenticeship, originally to Certificate III (the normal trades level), but since the late 1980s to
Certificate IV level, in recognition of the increased knowledge content. Under previous licensing
arrangements, an AME licence could be gained via a number of paths, including from a nonaviation background, provided CASA’s theoretical knowledge and experience requirements were
met.
The apprenticeship comprised classroom training at a recognised provider (TAFE) and work
experience in an employment situation. Workplace experience was recorded in the Schedule of
Experience (SOE), a record detailing the on-the-job experience a person had gained doing
particular tasks. State government training authorities administered trades-based
26
Commonwealth of Australia, 2006.
144
apprenticeships, and typically funded around 1,300 classroom hours that included supervised
practice in the TAFEs, but not workplace experience.
Once the AME qualification had been gained, the aspiring LAME sought experience and
theoretical knowledge in the maintenance specialisations for which s/he sought licence
privileges. CASA issued the licence after it had accepted the applicant’s SOE and the applicant
had passed an examination (known as the CASA Basics) which it set and administered to test
whether the applicant had the necessary theoretical underpinning knowledge to justify granting
the class of licence concerned. Importantly, licence seekers could acquire the necessary
theoretical knowledge through self-study. Our interviewees have recounted how the
examination process used to be predominantly essay-based, requiring the examinee to explain
concepts and even to draw certain aircraft systems from memory to demonstrate a depth of
understanding, though later it moved to a multiple-choice format. Older LAMEs report how the
licensing ceremony was viewed both by the regulatory authority and by the new LAMEs
themselves as a ritual of enculturation. To inculcate a professional ethic, it was common practice
for the representative of CASA, or its predecessor organisations, to hand over the licence
personally and give the new licensee a pep-talk about how the LAME was in the front line of
passenger safety and bore a weighty responsibility in the event of an aircraft crash attributed to
faulty maintenance – and that in the event of a disagreement with an employer over a safety
issue, the regulator could be called in to provide support.
9.5.3 The impact of CASR Part 66
The new system, which superseded CAR 31 on 1 July 2015 (except for exclusion removal and
small plane maintenance licensing, where the earlier provisions will now remain in force until
2019), is more dependent on structured learning at the entry level than its predecessor. B
licences, when combined with appropriate type training and experience, confer privileges over
multiple types of aircraft and systems, and hence are far more comprehensive in their scope
than the individual licence categories issued under CAR 31. The underlying theoretical
knowledge is correspondingly deep, broad and comprehensive, justifying a Diploma
qualification, and is to be acquired at or near the beginning of a LAME”s career. This closes off
the option of building up a suite of licence categories and ratings progressively over a full career
as experience is accumulated in the work process to complement the additional instalments of
theory. It front-loads theoretical knowledge acquisition, but further increases its cost by
commodifying it.
The EASA Part 66 regulations specify around 2,400 training hours to qualify for a B licence,
together with a period of experience ranging from five years for those who start from scratch to
two for those starting from an already completed apprenticeship (although recall that Australia’s
corresponding CASR Part 66 does not specify numbers of training hours). There is therefore a
large training gap between the Certificate IV (previously the platform from which a license was
sought) and the new Diploma. The original RIS (Regulatory Impact Statement) for the new Part
66 framework put this training gap at 550 hours on average (p. 7), but in reality it is between
1,000 and 1,500 hours (as we establish below, in consultation with the Victorian Purchasing
Guide for MEA11),27 depending on the exact qualification and licence sought.
While the CASA RIS indicated that the cost of this training would be borne by government, State
training authorities have almost uniformly refused to fund it, and paying for it has been left to
the individual or to generous employers, though since 2013 it has been possible to fund the
extra training through a student loan known as VET Fee-Help. This has allowed costs to escalate.
27
State of Victoria (Department of Education and Early Childhood Development) 2013.
145
Further, once the transition is complete, it is intended that the option of self-study for the
theoretical component will no longer be available for knowledge training, though several other
nations operating under the general EASA framework, notably Singapore, still permit it. CASR
Part 66 mandates that category training – including knowledge training – be delivered as well as
assessed by Part 147 organisations. This requirement is no doubt good for the business models
of these organisations, but, when combined with the escalating fee structure itself, presumably
explains why such a small proportion of current apprentices are training for a qualification at the
appropriate level. The Basics examination option will no longer be available after June 2015,
except for exclusion removal and small plane licensing.
For those seeking to gain prior standing of Certificate II qualifications towards the Diploma, or
even the Certificate IV, there are problems in that some of the competencies need to be taken at
higher levels, with higher pass marks, thus perhaps requiring that they be studied twice – again
at the trainee’s expense.
9.5.4 Shifting liability and challenges to quality: CASR Parts 145 and 147
With the new suite of maintenance regulations, CASA delegates two of what were previously its
central responsibilities for assuring the quality of training and assessment. In CASA’s words
under Part 147, the competency-based system “replaces the knowledge tests and experience
schedule”.28 Thus the process of assessing an individual’s knowledge and experience, in terms of
their adequacy as a basis for exercising the responsibilities of licensed practice, has been folded
into the process of assessment for the base qualification to work on aircraft.
First, except for the two remaining transitional cases, CASA will no longer administer the licence
examinations or set the central bank of questions. This will allow a variety of examinations to
proliferate, with questions derived from multiple sources. Previously the content of each test
was standardised; under the new system RTOs will develop or purchase their own examinations.
This means turning over the responsibility for the theoretical knowledge held by licensed
engineers to a fragmented training sector with a track record of uneven quality. CASA will issue
the licence on the recommendation of an approved Part 147 organisation, but will play no other
part in the assessment of competence, theoretical knowledge, or experience. Quality assurance
is now based on CASA’s audits of Part 147 organisations, although these organisations are also
audited under the training regulator, ASQA.
Second, nor will CASA scrutinise a prospective licensee’s records of their experience, formerly
known as the Schedule of Experience but now known as a Log of Industrial Experience, used for
evidence of competency. This task too is ceded to Part 147 organisations. These key
responsibilities for safeguarding the welfare of the clients of MROs have been transferred from
the safety regulator to a training sector which was never previously expected to be accountable
to this extent, is not required to do so under the broader conditions of registration as an RTO,
and operates under a pattern of incentives which makes it unattractive if not impossible to give
such considerations the priority they previously held. CASA retains some reserve of control over
the process through its authority to approve and audit MTOs. However, and critically, its powers
in this regard are constrained, in many cases to the point of becoming unenforceable, because
of the broader requirements of the VET regulation scheme.
Several training organisations approved as RTOs but lacking MTO status are permitted under the
broader training regulatory scheme to deliver and assess aircraft maintenance training to the
level of Certificate IV, so long as their training activity does not extend to Diplomas linked to a B
licence. However, the mutual recognition requirements of the VET legislation make it obligatory
28
Civil Aviation Safety Authority (CASA), 2007b, p. 15.
146
for approved Part 147 MTOs to recognise certificates of attainment issued by another RTO for
purposes of credit or advanced standing even if that RTO does not itself have Part 147
approval.29 This represents a loophole through which inadequate standards of training, and
more importantly assessment, can “leak” into the process of qualifying for a licence. While
category training is reserved for Part 147 organisations (and, according to the Part 66 MOS, the
pass mark for modules must be 75%), “mutual recognition” requires RTOs/MTOs to grant prior
standing to certificates of attainment from non Part 147 organisations (which can have a pass
mark of 50%). This is a tension or contradiction between CASA and ASQA regulations. The result
is incompatible incentives, unclear lines of accountability and confusion about what is required
which is likely to be experienced by MTOs and apprentices trying to navigate the system. It is
one of a number of quite technical difficulties faced by people in Part 147 organisations that, in
the interests of not cluttering the text with detail, are not fully outlined here. It is especially a
problem if AMEs with Certificate IV competencies gained in non Part 147 MTOs seek a licence,
and even more so when trainees bearing the Certificate II in Line Maintenance seek prior
standing.
In the absence of enforceable regulatory power, the responsibility for guaranteeing that
maintenance employees are adequately trained is shared with Approved Maintenance
Organisations (AMOs). The CASR Part 145 Manual of Standards (MOS) specifies that an AMO
must develop a maintenance exposition,30 a document describing inter alia the processes by
which the AMO will formally authorise and approve licence and qualification holders to carry out
and certify for maintenance.31 The Part 145 MOS requires that
An AMO must specify standards (including, but not limited to, qualifications
and experience) in its exposition for the competence of individuals involved in
any maintenance, management or quality audit task and must ensure these
individuals meet the standards for a task that they are authorised to perform.32
The AMO is now held responsible for its employees’ competence, and hence may be liable under
civil law in the event of a maintenance issue caused by faulty training - as discussed in the
previous chapter.
9.6 Australian aircraft maintenance training and international standards
9.6.1 Approach to making international comparisons
There are three principal respects in which Australian aircraft maintenance training appears to
be falling short of international standards. First, the funded training hours allocated to particular
units of competency are sometimes insufficient for teaching to international standards. Second,
it has proved difficult to encapsulate theoretical content in the competency standards of training
packages, and the standards therefore provide inadequate guidance to curriculum developers,
who are thrown back on their own resources. Third, Australian formal experience requirements,
although similar to those prescribed by EASA and the International Civil Aviation Organisation
(ICAO), are no longer subject to CASA enforcement because the judgement on adequacy is now
left to the discretion of VET providers and employers.
29
See Australian Skills Quality Authority (ASQA), nd.
30
Civil Aviation Safety Authority (CASA), 2011c.
31
ibid.
32
ibid., 145 A 30 d, p. 4.
147
The task of comparing Australian training against international benchmarks is a difficult one.
Without undertaking this task comprehensively, it is nevertheless possible to assemble evidence
demonstrating that Australia is not meeting EASA benchmarks in terms of numbers of funded
training hours, as well as in the specification of training content. While EASA regulations are
clear about the numbers of training hours required for the qualifications which underpin the
licences, the CASR Part 66 MOS (which in other respects is a near mirror image of the EASA
Annex III Part 66 regulations) does not specify numbers of training hours for category training.
However, the Victorian Purchasing Guide33 for the MEA11 Aeroskills Training Package, which sets
a benchmark for the funding practices of other states, makes up to some extent for this
deficiency by specifying how many funded hours the government will allocate training providers
to deliver particular qualifications and units of competence.
International training standards are contained in ICAO Annex One, and its associated ICAO
Training manual.34 While there is some lack of clarity about the extent to which the ICAO Annex
One training standards are intended to be mandatory, there is no doubt these are accepted
international benchmarks. The standards emphasise the need for “a high degree of technical
knowledge” and “diagnostic prowess”, [1-1]. Training, the manual argues, should equip trainees
not just with theoretical and practical skills and technical knowledge, but with judgement, a
sense of responsibility [1-5], and a high degree of confidence, competence, initiative, team spirit
and self-reliance [1-1]. Leaving aside any other implications, this means that the ICAO standards
go much more thoroughly into the “soft” aspects of competence which are notoriously hard to
define and test under the definition of CBT followed in Australia. Such characteristics would be
enhanced through “social learning” during workplace experience, the evaluation of which, as
explained above, has been delegated by CASA to the VET provider who will usually have had no
opportunity to observe candidates’ interactions with real colleagues.
ICAO identifies three phases of competence acquisition: knowledge (phase 1), practical skills and
attitudinal training (phase 2) and experience (phase 3). Despite the sequential specification of
these phases, the Training Manual stipulates that they are meant to be completed as far as
possible concurrently.
The ICAO and EASA standards complement one another in mapping out the scope of training
and experience required internationally for full competence as a licensed or unlicensed AME.
The comparison here has involved lengthy and intricate scrutiny of the documents that prescribe
the details of training practice in each jurisdiction, generally using different conceptual
frameworks to classify the elements. This detail is reproduced in Appendix 2 for the benefit of
training specialists who need access to information at this level of specificity. The analysis that
follows here summarises the key findings that emerge from the comparison.
First, a gap of some 1,000–1,500 (depending on the particular qualification and licence sought)
training hours exists between the Australian Certificate IV (which, it will be recalled, is the level
to which almost 98% of current apprentices are studying) and the EASA/CASR Diploma. This gap
is not funded in almost all States, leaving the cost to be borne by the individual, even supposing
that suitable bridging courses are offered at all. Moreover, in the specific case of theory training,
the funding arrangements in Australia fall significantly short of those required to reach
international standards.
Second, the theory content of the relative Australian training packages is underspecified by
comparison with the overseas requirements. To quote only one example, two apparently
33
State of Victoria (Department of Education and Early Childhood Development, 2013.
34
International Civil Aviation Organisation (ICAO), 2003.
148
practical competencies in the former MEA011 Training Package, “Remove aircraft electrical
hardware” and “Install aircraft electrical hardware”, are deemed to “cover” three full modules in
the EASA syllabus involving Mathematics, Physics and 18 other subjects of the EASA module
“Electrical Fundamentals”, most of which appear to be wholly or primarily theoretical in content.
In the new (2015) training package, the problem is partly ameliorated by the creation of a new
competency standard – MEA 148, which specifies the theoretical content in more detail (see
appendix 2). We stress that in itself, this does not prevent a conscientious Australian MTO from
teaching to the full EASA syllabus, or to the ICAO Training Manual Standards. However, given
that the individual MTO is left with considerable discretion to define, not only the content
underlying each of the competences, but also what constitutes a satisfactory learning outcome
and test for it, the scope for variation and more specifically corner-cutting appears wide, and the
opportunities for regulatory oversight and quality assurance somewhat thin on the ground.
Third, while the ICAO Training Manual35 distinguishes “practical maintenance skills training”
(phase 2) from knowledge training (phase 1), the Australian practice regarding “practical
maintenance experience” (phase 3) is uncertain. CASA’s position is that the task of mapping the
experience attained by trainees is now the responsibility of the VET system, which, we have
suggested, is imperfectly mapping it. In particular, it would appear that not all trainees are being
encouraged to keep the log of industrial experience, which is intended to replace the former
SOE. The overall picture is such as to suggest that Australian trainees are not getting the level or
scope of experience that would compare favourably with international standards. Indeed, it is
hard to see how they could, when so many of the workplaces that could have provided them
with such training have now closed down or are struggling to offer apprenticeships.
9.6.2 Is our CBT their CBT?
We turn here to the second set of reasons why Australian training may be falling behind
international benchmarks for aviation training in general, and aircraft maintenance training in
particular. The first of these derive from the limitations of the behavioural CBT model, which still
plays a part in the Australian approach to the specification of competencies. The second is the
legislatively-based institutional division between ISCs (Industry Skills Councils) (which at the time
of writing develop training packages and qualifications) and the training market, composed of
RTOs – which implements them. Yet to look at the current training initiatives from the
International Air Transport Association (IATA) and the ICAO, it would appear that Australia is
actually ahead of the field in adopting CBT, and the rest of the world is only now beginning to
catch up. The question is whether CBT as understood in Australia actually has the same meaning
as CBT in the language of ICAO and IATA, and if not, whether the Australian implementation of
the concept needs updating to meet what are increasingly recognised as world standards.
In 2009 IATA proposed to counter the looming global shortage of qualified and licensed
personnel through a new IATA Training and Qualification Initiative (ITQI), which proposed
reducing training times and implementing CBT.36 ICAO followed suit with its Next Generation of
Aviation Professionals (NGAP) program sharing essentially the same objectives. NGAP in October
2014 conducted a symposium aimed at sharing conceptions of new training requirements and
competencies, new training methods and to “highlight the need to coordinate more closely
around these issues”, as well as ensuring “more equalized minimum implementation of civil
35
International Civil Aviation Organisation (ICAO), 2003
36
International Air Transport Association (IATA), 2009, 2011.
149
aviation Standards and capabilities in all of its 191 Member States”.37 These programs converged
on the ICAO TRAINAIR Plus program, which
… embraces the principles of the ICAO competency-based approach and
fosters the implementation of quality systems in civil aviation training
institutions in line with the competency-based approach advocated by the
Organization. The application of the updated methodology will considerably
reduce the time of production of Standardized Training Packages (STPs),
simplify the validation procedures, and decentralize decisions related to the
approval of STP material by giving member centres more autonomy.38
TRAINAIR offers courses for training instructors and developers, so they can develop
Standardised Training Packages (STPs) using competency standards and Instructional Systems
Design (ISD) methodology. However, these are not “Training Packages” as the term is
understood in Australia – in particular because they contain whole training courses, not just
statements of training outcomes and qualifications. The TRAINAIR program also serves as a
repository for a number of STPs (a quick website search revealed few related to aircraft
maintenance). The TRAINAIR PLUS Training Development Guide (TDG) is intended as a tool to
support international cooperation in the exchange of training courses, the TDG promotes a
competency-based methodology for the development of high level training courses and
programmes to ensure a mutual acceptance by training institutions.39
The ICAO NGAP and TRAINAIR both use CBT:
The development of competency-based training and assessment shall be based
on a systematic approach whereby competencies and their standards are
identified, training is based on the competencies identified, and assessments
are developed to determine whether these competencies have been
achieved.40
CBT according to these programs consists of
The specification of the competency to be achieved, the evaluation of the
students’ entry level, the selection of the appropriate training method and
selection of training aids and the assessments of a student’s performance…41
(emphasis added)
This is different from the Australian concept of CBT in important respects. The Australian/UK
concept is neutral about training methods – or the means by which competence is achieved. To
repeat, the institutional separation between Skills Councils and the training market reinforces
this – the former develop competency standards, encode them in qualifications, and then issue
them into the training market, where RTOs develop curricula, making choices about training
methods and assessment methodologies. Interestingly and significantly, ICAO’s Asian Regional
Aviation Safety Group (RASG) argued in 2011 for a “CBT” approach, which included “the
development of a curriculum based on adult learning principles and with a view to achieving an
optimal path to the attainment of competencies”, while obliquely criticising Annex 1 as
37
International Civil Aviation Organisation (ICAO), 2014b.
38
International Civil Aviation Organisation (ICAO), 2010e, 2.2.2; 2013d, p. 14.
39
ibid., 2011a, 2013d.
40
ibid., 2006, ch. 2.
41
International Air Transport Association (IATA), 2009; 2011:7.
150
“essentially an inventory of knowledge, skill and experience requirements, without specific
performance criteria”.42
The ICAO/IATA concept of CBT is embedded in an approach to training known as Instructional
Systems Design (ISD), a staple of many training textbooks, with long roots in United States (US)
military training.43 Raymond Noe’s44 Employee Training and Development combines the ISD
approach with American human resource management-style “strategic training”, into a
systematic approach to the identification of training needs, the definition of training objectives
based on the needs, and the design of training programs around those needs. It links training
methods to training objectives based on understandings of what approach to learning best suits
different objectives, and these inform training delivery. The final evaluation stage links back to
each step in the process. This approach is known in ISD as the ADDIE model – Analysis, Design,
Development, Implementation and Evaluation.45 The Australian system’s institutional separation
between RTOs and ISCs cuts across the link between the evaluation stage, and the (re)definition
of training needs and objectives.
ISD is informed by a taxonomy of learned outcomes – Verbal Information, Intellectual Skills,
Cognitive Strategies, Attitudes and Motor Skills46 – each of which entails a different approach to
learning. In ISD, a particular theory of learning provides guidance for instructional events and in
shaping the learning environment, again according to the desired learning objectives. For ISD,
clear “events of instruction” map on to stages of learning through which learners move during a
training session.47 It follows that the “Standardised Training Packages” that emerge in the
TRAINAIR programs are likely to be quite prescriptive about aspects of training itself, including
the choice of training and assessment methods. This is a marked departure from the Australian
approach, in which ISCs develop competency standards and qualifications, combining them in
training packages, which are then released into the training market, where RTOs/MTOs make
uncoordinated choices about training methods under market pressure.
The ISD approach appears to be becoming the global norm in global aviation. It is difficult to
reconcile with the Australian institutional separation of qualifications and competency-based
outcomes from the training strategies developed to achieve them, in the latter case under acute
pressure from funding and resource constraints.
There will inevitably be argument over which of these approaches corresponds to “real” CBT.
The ICAO and IATA have clearly been more incremental in their reform approach, drawing on
long-established ISD principles, while Australia went early for a more extreme version – actually
a British version from the 1980s, arguably owing more to economists than to training specialists.
If these international developments do lead to increased standardisation of aircraft maintenance
training materials and practices, Australia will need to change its practices and policies and
reshape its position on CBT – and indeed, on other aspects of its VET model – if it is to align with
them. Staying the odd man out will not be an option once the market for MRO skills, not to
mention the market for MRO services, becomes genuinely global and has shaken out to the
point where it becomes appropriately segmented between high-value and low-cost providers. If
42
International Civil Aviation Organisation, Regional Aviation Safety Group (ICAO RASG), 2011, pp. 1-2.
43
Gagne and Medsker, 1996.
44
Noe, 2013.
45
Noe, 2013, pp. 11-13.
46
Gagne and Medsker, 1996.
47
Noe, 2013, p.167.
151
Australia is to become a participant in either the international MRO market or the international
MRO training market, it will need to ensure both that the qualifications it offers and the licences
it issues are genuinely portable, and that its standards are seen to be keeping up with those of
other advanced nations to which customers will increasingly be looking for their high-value
maintenance requirements.
9.6.3 Is Australian training still ICAO-compliant?
The question that inevitably arises from the above analysis is whether Australian MRO skills
training is still compliant with Australia’s obligations under the Chicago Convention. Certainly it
could be argued that by devolving two of its key responsibilities to organisations which lie
outside the safety regulation system, without retaining even reserve powers to ensure that
maintenance training meets internationally accepted standards, CASA is at odds with the spirit
of the international safety regulation framework. But here once more we return to the
conundrum already discussed in the earlier chapters: that the framework set up under the
Chicago Convention, while based on the quest for equivalent and transnational standards, is
minimally coercive when it comes to regulating the actual behaviour of member states.
It must not be forgotten, either, that ICAO continues to regard Australia as one of its better
performers when it comes to the implementation of Standards and Recommended Practices
(SARPs), and there are plenty of states doing considerably worse. The point is that Australia does
not just need to stay ahead of the worst performers. It needs to be seen to be up with the best if
it is to compete at the high end of the global MRO market where its strengths are of greatest
value and its comparative disadvantages least significant.
9.7 A reform agenda for aircraft maintenance training in Australia
Research interview and survey responses suggested concern in the industry that licensing and
training reforms implemented since 2007 did not work as intended. Employers mentioned
inability to recruit appropriately skilled and licensed individuals, and trainees mentioned
difficulty of gaining access to, as well as navigating, the new system. One of the most immediate
problems has been the reluctance of state training authorities to fund beyond Certificate IV,
contributing to the risk that Australia may not be capable of meeting the minimum requirements
of the transition to the EASA system.
Leaving aside the significant problem of low numbers in training in 2015, this chapter has
identified issues of training package content. One of these is the quite unusual degree to which
safety rests on the adequacy of conceptual understanding and on the inculcation of professional
standards. There have been questions about the extent to which theoretical underpinning can
be specified and assessed adequately within a behaviourally based system of standard-setting
and assessment.
Another issue is the question of an effective response to the common complaint that today’s
graduates lack “hand skills”. This shortcoming justifies the insertion into the Training Package of
a set of generic manual competencies, something which is either absent or inadequately
specified in current packages, despite being explicitly addressed in the ICAO Training Manual.
However, even were this to happen, it would still not ensure that that trainees had adequate
opportunities to practise hand skills in safe environments because Training Packages are not
permitted to specify such matters of process. Some employers advocate that the foundation
years of AME training, leading to a Certificate II, should be located in schools or VET colleges, but
it is not certain that these are appropriately resourced for this to occur. Thus the solution to
both these questions currently lies beyond the remit of the ISC, and remains not addressed.
An issue that is of greater importance in the MRO industry than in most others is the
requirement to prepare the workforce for a global labour market. Thus harmonisation with EASA
152
standards and qualifications is of critical and more challenging importance than the more usual
challenge for Commonwealth and State skills bodies of securing mutual recognition at a national
level.
Two key structural features of the Australian VET model as it is currently in force are creating
barriers to achieving globally-aligned standards and their recognition. The first is the institutional
divide between the specification of training outcomes on the one hand, and on the other the
design and delivery of training and assessment. The second is the devolution of assessment to
the same parties who have undertaken the training in the first place, without adequate external
quality checks. The 2014 Allen Consulting review of Australian VET quality acknowledged the
first of these by voicing
a concern, that while ISCs are the bodies responsible for competency standard
development they currently have minimal ability to ensure that registered
training organisations (RTOs) consistently interpret, deliver and assess the
requirements of the standards for all units and qualifications.48
One of the two discussion papers49 produced to stimulate discussion of reform alternatives
painted the process of training package review and development as remote, complex, timeconsuming, bound in red tape, and not responsive to employer feedback. Yet the process of
“streamlining” is false economy, if the result is flawed by lack of input into the specification
process for each qualification by relevant industry voices, resulting in gaps which may affect the
performance of qualification-holders in a real workplace environment. Ironically, recent issues of
representativeness can be traced back to changes over the last thirty years, progressively
excluding unions from the qualifications-setting process, thereby reducing the weight given in
consultation to one of the most informed voices — that of the people who actually work in the
occupation and understand the skills required to practise it in real workplaces. In the case of
aircraft maintenance, the voice of industry is needed alongside that of CASA, because
competency standards and qualifications must not only make reference to international
standards, but reflect them in practice.
These shortcomings cannot be remedied by outsourcing the standard-setting process to a
commercial organisation which would have little incentive or obligation to seek fully
representative input to its deliberations. In July 2015, the Commonwealth and State ministers
agreed on six objectives for a reformed national VET system. These were: clear governance roles
for industry, the Commonwealth and the States and Territories; streamlined industry-defined
qualifications responsive to major national and state priorities and emerging areas of skills need;
a system of regulation and quality assurance based on risk management and consumer choice;
appropriate valuation of apprenticeships as a career pathway; and the targeting of government
funding to areas of jurisdictional inconsistency and “disruption to the fee-for-service market”
failure.50
9.8 Conclusion
Arguably, disruptions to the role of the market in allocating sufficient training places are
signalled by the declining uptake of AME training and licensing, the declining numbers of
apprentices and the resulting risks to the viability of RTOs with MRO approval for the provision
of category training. A further market barrier lies in institutional fragmentation (airlines/GA;
48
Allen Consulting, 2013, p. vi.
49
Department of Industry: Skills, 2014.
50
Department of Education and Training (2015).
153
civilian/Defence) and geographical spread of the industry, resulting in a difficulty in ensuring offthe-job training access across the industry. As already argued, the creation of a LAME career
pathway depends on opening up access to funded diploma-level qualifications. As well as market
barriers, there are specific considerations, such as the very high risk to public safety posed by
gaps in training, assessment and certification; the variety and national dispersion of the industry
and the rate of technological change within it; the need for global alignment and the significant
opportunities for creating a large new export education and training market. For all these
reasons, education and training for aircraft maintenance trade and licence qualifications require
special regulatory and funding attention during the process of VET reform. In Chapters 11 and
12, a range of options is canvassed, inside and outside the current VET system.
Aircraft maintenance skills training does not have time to wait for a drawn-out solution. The
system is in crisis already, and drastic measures will be needed to revive it if Australia is to retain
even the basic MRO capability it will need over the coming decade, but especially so if it is to tap
into the enormous market for maintenance skills training which is already emerging across the
world and Asia-Pacific in particular, before other nations pre-empt the option. It is apparent that
if Australian aeroskills training cannot recover in time while it remains embedded within the
current model, and the best prospect of a resurgence lies in a rapid exploration of measures to
turn around the problems identified in this chapter.
154
RECOMMENDATIONS
•
RECOMMENDATION 15: That appropriate funding be made available to support exclusion
removal for those partial B licence holders who wish to recover their former potential
productivity by regaining a full B licence
•
RECOMMENDATION 16: That institutional and funding measures be put in place as a matter
of urgency to ensure that the 98% of apprentices currently studying for a Certificate IV
qualification have a readily accessible option on completion to upgrade to the Diploma
required for a licence.
•
drawing on the combined resources of the university and TAFE sectors, to take carriage of
the training of Australia’s aircraft maintenance engineers, to provide career paths to and
from advanced aerospace manufacturing -and to provide a commercially attractive vehicle
for an export industry in aircraft maintenance training and qualifications.
•
RECOMMENDATION 18: That the training structure for AMEs be redesigned to provide for:
o
a curriculum-based approach which is compatible with the international (EASA
and NGAP) protocols and reflects the work already done in Australia on a
common civilian/defence syllabus;
o
expert and independent oversight/moderation of the assessment process; and
o
closing the current loophole in the VET regulations that allows non-category
training to provide prior standing for category training.
Pending the establishment of the NAC, that the current constraints of the VET
framework be relaxed for this occupation to the extent required to make these
reforms possible, in recognition of the major public safety implications of having a
properly qualified aircraft maintenance workforce.
•
RECOMMENDATION 19: That the training package be reviewed to create a broader base of
capabilities (possibly based on a common first year) allowing trainees to specialise in either
traditional MRO or the expanded industry, as well as providing avenues for early-career
AMEs who find themselves temporarily surplus to requirements to move into related
occupations (e.g. automotive mechanics or aluminium shipbuilding) with minimal retraining.
155
156
Chapter 10 Australia and the Emerging World MRO
Skills Crisis
10.1 Introduction
Debates over the riskiness of offshoring are being increasingly overshadowed by a greater threat
to aviation safety. This is the prospect that the whole world will find itself short of trained
personnel to keep up current standards of maintenance. The certainty of this risk has been
endorsed by two of the most credible institutions in the world aviation, the International Civil
Aviation Organisation (ICAO) and the International Air Transport Association (IATA).
This chapter begins by summarising the forecasts from these and other authoritative
international sources that most regions of the world face a growing shortfall of skilled aircraft
maintenance engineers (AME) labour over the next twenty years, and evidence that it is already
beginning to take effect. We then derive a range of credible estimates of the future demand for
skilled labour in Australia and assess the current capacity of the Australian training system to
meet that expected demand.
10.2 Estimates of future skill demand
Projections of future skill demand, especially in an industry experiencing the current levels of
instability, are sensitive to a large number of factors which cannot confidently be predicted.
Forecasting in this area will never be an exact science, hence the apparent precision of what
follows should not be mistaken for accuracy; it is simply a matter of quantifying projections and
converting them into visualisations for the sake of making it clear how large the challenges are.
At least four credible sources have made detailed projections of the world demand for new
aircraft engineers (i.e. additional to the current workforce, and hence requiring to be trained up
to professional entry level over the period in question). It is difficult to compare these estimates
exactly, since they cover different time periods, each covers a different segment of the global
fleet, and none makes full allowance for general aviation (GA). Some of their underlying
assumptions may differ, such as the assumed rate of attrition in the existing workforce. Table
10.1 sets out the most important.
IATA developed its projections on the basis of a membership survey undertaken in 2009, while
ICAO carried out a major research project in 2010 based on expert advice from its national
authorities.1 Both studies are reasonably well documented, though the public versions leave
many gaps in our understanding of the underlying methodology or the assumptions that went
into their projections. Boeing’s methodology draws on its internal research, built largely around
detailed projections of aircraft sales in each broad category over the next 20 years, but the
published research reveals little of the detail behind its calculations. Airbus, while publishing its
own annual forecasts of growth in activity and sales over the same period, does not offer any
estimates of future labour requirements.2
It will be seen that the IATA and ICAO estimates fall within the same order of magnitude, once
allowances are made for the differences in their coverage and the different time periods
1
International Air Transport Association (IATA), 2009; International Civil Aviation Organisation (ICAO)
2010d.
2
Boeing, 2012, 2013, 2014b.
157
involved. Both sets show strong growth in demand in the period between now and the early
2030s. The Boeing figures are substantially lower (especially in terms of personnel per aircraft),
and the surprising fluctuation between the three successive annual estimates provides a
reminder – at least in the absence of information on how they were calculated – that they need
to be treated with a degree of caution. Nevertheless, they are important because they are based
on proprietary information not available to the other sources, and can be confidently treated as
the lower boundary of the range of credible predictions.
Table 10.1 Estimates of future world demand for qualified AME labour
Year
Source of estimate
2010
ICAO 2010
Estimated
demand
580,926
3
2015
CAVOK 2015 (commercial jet and turboprop)
378,762
2015
CAVOK 2015 (technicians only)
278,073
2018
IATA 2009 (main-route RPT only)
405,000
2020
CAVOK 2015 (derived)
469,752
2020
344,875
2025
CAVOK 2015 (derived)
566,051
2025
415,574
2026
IATA 2009
739,000
2030
ICAO 2010
1,164,969
2031
Boeing 2012 (jet airliners >30 seats only)
601,000
2032
Boeing 2013 (as above)
556,000
2033
Boeing 2014
584,000
2034
Boeing 2015
609,000
Sources: IATA, 2009; ICAO, 2010d, CAVOK, 2015; Boeing, 2012, 2013, 2014b
The 2015 CAVOK report 4 offers a new set of estimates, considerably more up to date than those
of ICAO and IATA, but again covering a different subset of the world fleet and using a different
classification, both of which make direct comparisons problematical. Its estimates deserve
respect above all for their currency, but also because of the reputation of these consultants for
being well informed and cautious in their predictions (as evidenced by the fact that their
projections run only ten years into the future). Their data are drawn directly from Federal
Aviation Administration (FAA) repair station records, presumably compiled in the exercise of its
responsibility to “certificate” repair stations outside as well as within the United States (US) (see
Chapter 7). While CAVOK echo the other sources in disaggregating their statistics geographically
3
CAVOK, a global aviation services consulting firm, is a division of Oliver Wyman. For some years, this firm
has published an annual maintenance repair organisation (MRO) survey under the Oliver Wyman imprint.
These earlier surveys are referenced in this report under the names of the authors, Spafford and Rose.
This 2015 study is a considerably more ambitious overview of the industry, carried out in conjunction with
the Aeronautical Repair Stations Association (ARSA) and incorporating information previously collected
and analysed by TeamSAI (now absorbed into CAVOK) for ARSA and published by that organisation.
4
CAVOK, 2015.
158
Chapter 10 - Australia and the Emerging World MRO Skills Crisis
only by the broadest ICAO/IATA regions, they are the only ones which do so by category of
maintenance repair organisation (MRO). Whilst of limited usefulness for modelling specific
demand in Australia, the CAVOK estimates thus potentially provide a basis for modelling
scenarios to reflect different assumptions about the future structure of the Australian industry.
However, it is hard to compare the CAVOK forecasts with the others for two reasons. Firstly, the
CAVOK estimates apply only to 2015, and labour demand as such is not modelled in the
projections. Still, it is possible to do such modelling based on the predictions for growth in value
which are provided for each segment, providing one accepts that the ratio of labour to other
costs will not alter substantially over the 10-year period. This is the basis for deriving the
estimates shown in Table 10.1, which do not appear in CAVOK’s own publication. Secondly, the
terminology which they use to describe different categories of labour is somewhat puzzling, and
leaves it unclear whether the scope of their forecasts is the same as those from the other three
sources.
Each of the other three sources uses a single term in its forecasts to cover all qualified personnel
within scope. “Maintenance personnel” is used by the ICAO, “technicians” by IATA and Boeing.
Since their estimates, at those points where they can be compared, fall within much the same
order of magnitude, it is assumed here that all three terms refer to the same kind of labour, and
that this in turn is the same covered by “aircraft maintenance engineers” in Australia. However,
CAVOK classifies the workforce in three nested levels: “labour” in the generic sense,
“technicians”, and “certificated” technicians. The third term is virtually equivalent to licensed
aircraft maintenance engineers (LAME) in Australian usage, meaning someone who is authorised
(in this case, by the FAA) to sign off on the completion of maintenance.5 There is a less clear
dividing line between “technicians” and the rest of the labour that falls within scope, though it
seems reasonable to understand the term in the same sense as “AME”, i.e. someone who has
completed an advanced middle-level training program, approved by the national aviation
authority (NAA), to qualify them specifically to work on aircraft. Whether the remaining labour
force is expected to be qualified at all, and if so to what level, is not made clear. The issue is
further confused by the fact that the CAVOK study explicitly includes at least parts of the supply
chain – indeed, specific subcategories are shown for on-aircraft line maintenance and the line
maintenance supply chain.
The problem is more than one of terminology, as it directly affects the estimation of future
needs for highly skilled labour. The CAVOK report supplies breakdowns not simply for the labour
force as a whole, but for airframe, engine and component maintenance, though the proportions
vary relatively little. Across all categories technicians represent 73% of all labour, while the
proportion of “certificated” technicians in the workforce as a whole varies between 16% for all
MRO (including line maintenance, for which no breakdown is given) and 19% for airframe
maintenance. The ratio of certificated to other technicians ranges between 1:3 and 1:4,
corresponding broadly to the ICAO benchmark for the same ratio. From this it seems reasonable
to conclude that in CAVOK’s assessment, the section of the aviation workforce modelled by the
ICAO corresponds only to the technician category, and hence that the requirement for workers
who have received intensive and specialised training of the kind required to qualify as an AME in
Australia is 25-30% smaller than the other sources predict. It is open to interpretation that the
remainder could be unskilled or semiskilled labour, or could include A licensees working on
aircraft, and/or fully qualified tradespeople working elsewhere in the supply chain who are out
of scope for the present study. Given that labour is of fairly peripheral interest to the CAVOK
study, it seems inadvisable to accept its estimates as more authoritative than the ICAO or IATA
5
A definition can be found Federal Aviation Administration (FAA), 2001.
159
ones. Nonetheless, they do add to the range of credible forecasts, as well as providing a baseline
figure for 2015 which is not available from any of the other sources.
The ICAO’s regional breakdowns appear to be based on the notional premise that all aircraft
registered within a jurisdiction will be maintained within the same jurisdiction, though they do
assume some labour mobility, suggesting that persistent shortfalls in one nation’s training effort
could be compensated to some extent by increasing the output of other nations with a greater
capacity. The remaining forecasts do not make it clear whether they allow for offshoring, but
Boeing’s projections for 2033 appear to be based on each broad region maintaining its own
fleet: the ratio of AMEs per plane remains surprisingly consistent at between 12 and 14 across all
regions except the Middle East (18.5) and Asia-Pacific (14.7), where the higher requirement may
partly reflect the need for catch-up to compensate for present shortfalls of qualified labour.
The IATA research adds a further dimension to this information by attempting to map the
pattern of growth. Its consultations with member airlines indicated that the strongest net
growth in demand was expected to occur within the 4-year period from 2009, and remain strong
over the full decade of the 2010s, tapering off after that point (Figure 10.1).
Source: International Air Transport Association (IATA) 2009, pp. 13, 14
Series labels on second diagram read, from bottom to top: Next 12 months, 1-3 years, 4-10 years, 11-15
years.
Figure 10. 1 Survey responses on expected impact of maintenance labour shortage (Base year
= 2008)
While the report points out that this growth is likely to have been shifted back a few years
because of the lull in demand growth following the global financial crisis (GFC), such a pattern
160
still appears credible in the light of the evidence, discussed in Chapter 3, that the number of
current-generation planes in service will continue to grow strongly into the 2020s, and it will be
well into the next decade before there are enough of the new generation in service to bring
about a major decline in the maintenance requirement relative to the number of planes flying.
Boeing in its 2014 projections states specifically that they are based on the expectation of a
diminishing maintenance requirement over the next 20 years as a new generation of planes
comes to dominate the fleet, but still maintains only that this will “moderate” that growth.6 The
CAVOK projections are explicitly linked to assumptions about the future composition of the fleet
and the pace at which technological innovations will be implemented, and echo IATA, somewhat
more explicitly, in predicting a change in the rate of growth in activity, in different directions
depending on the segment, around 2020 as newer-technology designs come into more general
use.
From these sources we can conclude that the world maintenance workforce in twenty years’
time will be around twice the number employed in the base year for each set of forecasts.
Virtually all of this workforce — not just the net increase — will need to be recruited and trained
from scratch over this period. However, the growth pattern is unlikely to be linear. Three out of
the four sources suggest that we should reasonably expect demand to peak sometime in the
early 2020s — about the time when a high proportion of the current Australian AME workforce
will reach retirement age — and level off gradually over that decade to the point where new
recruitment is needed only to compensate for attrition, though it is likely that further training
activity will be required to update the skills base of the workforce in employment at any given
time.
Both the ICAO and the IATA projections were made with declared intent of assessing the
adequacy of the current training infrastructure to meet future demand. Both suggest the need
for major upgrades of capacity in most parts of the world. Table 10.2 below contains specific
estimates of the average requirement for newly trained personnel over the next 20 years and
the likely shortfall in each year, assuming the potential output of each national training system
remains at its current level.
Table 10. 2 Estimated average annual training requirement and shortfall by region, 2011-2030
Region
Annual
training need
Annual shortfall
(surplus)
58,635
3,769
3,169
15.9
Asia-Pacific
289,510
190,10
14,745
22.4
Europe
330,522
22977
8,352
63.7
Latin America
101,226
6,881
5,566
19.1
59,905
4,107
2,062
49.8
325,171
13,586
(15,824)
116.5
1,164,969
70,331
18,071
74.3
Africa
Middle East
North America
World
Total required by
2030
Training capacity
(2010) as % annual
need
Source: International Civil Aviation Organisation (ICAO), 2009
The real significance of these figures is that the biggest shortfalls are expected to arise in
precisely those parts of the world to which Australian carriers are increasingly turning to meet
6
Boeing, 2014b, p.28.
161
their maintenance requirements. Already this development is showing up as something more
than speculation. As noted in Chapters 6 and 7, the major Hong Kong MRO HAECO (which took
over the heavy maintenance on Qantas’s remaining 747s in 2013) has acquired one of the
biggest US MROs with a view to accommodating some of its demand within the continental US,
after experiencing a 21% drop in profits in the first half of 2013 due to problems in recruiting
enough skilled labour. It is reportedly seeking government assistance to bring in more qualified
personnel from overseas.7
According to industry expert Chris Spafford, China in particular is expecting a major curtailment
of its ability to service foreign widebodies because the growth of its own fleet has completely
outstripped the growth of its workforce.8 Even the Gulf states, which only a few years ago were
expected to have no problems recruiting maintenance labour because of the huge pool of
trained labour available close to hand on the Indian subcontinent, are now expecting to
undertake significant recruitment within the next five years, with none of the local training
providers confident of being able to meet the full demand. In the words of a Lithuanian training
provider, “… the deficiency of skilled professionals will definitely take its toll, as this is a global
problem that cannot be solved by merely hiring people from other regions”.9
More remarkably, even in North America – the one region expected by the ICAO in 2009 to be
training well in excess of its needs for skilled labour – Spafford estimates that recruitment is
falling 15-17% below the rate of natural attrition.10 In a survey conducted by Spafford and Rose a
year earlier for the Oliver Wyman consultancy, American operators cited lack of skilled labour as
the main factor that prevented them from repatriating more of the maintenance currently done
offshore.11 This change is most likely related to the growth in American MRO businesses taking
in foreign work since the ICAO produced its original estimates.
Growing shortages of skilled labour in these regions will necessarily affect both their capacity to
take in work from countries like Australia, and the prices they will be able to charge in what will
progressively become a seller’s market. In the medium term, this is bound to mean a
compression of the cost differential between performing maintenance in Australia and
outsourcing it; eventually it could undermine much of the economic case for offshoring
Australian work, as is already happening for the US.12 In the longer run, the risk is that Australia
could run out of opportunities to offshore some kinds of work, or at any rate that other buyers
with greater market power will crowd Australian customers out, forcing them to use second-tier
providers of uncertain quality. If this happens, Australia will face a genuine threat to the safety
of its domestic aviation unless it is able to rebuild sufficient capacity to handle at least a
reasonable proportion of the work which has been lost overseas. Even in the best case,
Australian carriers could eventually find themselves paying more for offshore maintenance than
they would have been paying had they maintained the capability within Australia.
In this context it makes sense to investigate how much could be achieved if Australia were to
make the investment in repatriating a larger proportion of its maintenance currently performed
offshore, and in particular whether the current training infrastructure and arrangements would
be able to ensure an adequate supply of skilled labour to make this transfer feasible.
7
AviationPros, 2013.
8
Cited in Chandler, 2014.
9
AviationPros,2014.
10
Cited in Chandler, 2014.
12
11
162
10.3 Calculating Australia’s future requirements
So far as we know, nobody has yet made any publicly accessible forecasts of the future demand
for AME labour in Australia. The 2009 White Paper Flight Path to the Future made only a passing
reference to the size of the workforce needing to double – a rule-of-thumb estimate commonly
applied to growth in the workforce not only in aviation but in many areas of transport, globally
as well as in Australia.13 Even the ICAO and IATA do not disaggregate their estimates below the
level of very broad regions (in our case, Asia-Pacific). Translating these regional estimates into
forecasts for Australia is extremely difficult because Australia represents only an extremely small
and atypical segment of the overall Asia/Pacific market, with a relatively stable and mature
consumer market and industry structure in a region of the world characterised by massive
growth in demand for air travel and a major explosion in both the number and size of competing
firms.
Of the three sources, Boeing is the only one which publishes more informative disaggregations
of the forecasts within each broad region, though labour requirements are not regularly
included in these. A Boeing executive, in a 2013 newspaper interview,14 predicted that Oceania
(Australia, New Zealand (NZ), Niugini and all the Pacific islands as far east as Rapa Nui) would
need around 15,000 qualified engineers by 2032. By the time the 2014 forecasts were released,
however, the estimate had fallen to 14,000 by 2033.15 Boeing does not quote base-year
estimates for labour, and there has been no reliable way of estimating the present size of the
Australian AME/LAME workforce at any time since the Census in July 2011.
Without proprietary information to which we have no access, we have had no option but to
develop our own estimates derived with limited certainty from the CAVOK, Boeing, ICAO and
IATA forecasts, the Census, and government research bulletins drawing on Australian Bureau of
Statistics (ABS) Labour Force data.16 On these bases we prepared two sets of forecasts, one
linking labour demand to the size and composition of the Australian civil fleet, the other
estimating the requirements if the active labour force in Australia grows in line with projected
growth across the world industry.
The first analysis, based initially on the ICAO benchmarks, sets out to establish whether the
Australian AME labour force in the base year (set at 2013 for the purposes of comparability with
the Boeing projections) was adequate to the requirements of servicing the entire VH registered
(Australian) commercial transport fleet. It models not only the growth required to keep pace
with fleet growth, but the additional recruitment which would be needed to make up any
shortfall in the base year. The second, derived from the CAVOK estimates of base-year
employment and projected growth of activity in the sector, simply assumes the current (2015)
level of employment as a baseline and calculates the number of trained recruits that would be
required to keep this constant over the next ten years as a proportion of the world MRO labour
force, without implying any judgement about the appropriateness of the current provision. Thus
the two analyses serve different purposes, and their findings have different implications.
13
Australia, Minister for Transport and Regional Services,2009.
14
Cited by Creedy, 2013b.
15
Boeing Corp, 2104 b
16
Australian Bureau of Statistics (ABS), 2012; Department of Education, Employment and Workplace
Relations (DEEWR), 2012a, 2012b.
163
The ICAO figures, which represent the starting point for the first analysis, are based on a set ratio
of qualified workers to each plane:
•
20 engineers (five of them licensed) for each jet-powered passenger or cargo plane in
service;
•
three engineers (two licensed) for each plane in a category called “other” which consists
of multi-engined turboprop and piston planes in commercial service, but excludes
government and military aircraft, those used in non-commercial business aviation, aerial
work, pleasure flying and instructional flying, and all helicopters.
No minimum or maximum takeoff weight (MTOW) is specified for either category.
These ratios are described as the “most likely scenario”, and are assumed to remain constant, as
averages, over the period up to 2030 for which the projections are made. The ratios for each
category were calculated on different bases. Those for passenger and cargo aircraft are an
expert assessment made through a Delphi process in the light of “observed and reported
industry practices” (presumably worldwide), while those for “other” aircraft were actual ratios
taken from states which had only “other” aircraft on their registers. They are not intended as
normative, but can be viewed as an indication of representative (rather than best) practice
across the member nations, and consequently as benchmarks (rather than guidelines or quotas)
for adequate resourcing. However, while we refer to them for convenience as “benchmarks” in
the rest of this analysis, it must be understood that the ICAO itself does not refer to them by this
term.
The ICAO ratios do not attempt to break down the estimates between line, base and engine
maintenance. Moreover, it is clear from the remainder of the document that they are intended
as fixed ratios of workforce size to fleet size, rather than simply as meaning that there should be
a pool of 20 AMEs available to work on a given aircraft at the times when it needs maintenance,
but free to work on others at other times.
Obviously these are very broad averages (suggesting, for example, that a 747 requires the same
number of qualified workers to maintain it as an 80-seat regional jet), and the assumption that
the desirable ratios will remain constant over a 20-year period seems highly schematic. For an
exercise such as this, however, a broadly derived estimate is likely to be of more use, and even
more reliable, than one which attempts to be highly accurate. Over such a long timeframe,
where so many unknown factors could influence the eventual outcome, any attempt at precision
is likely to work against accuracy. So while the figures that result from any such calculation are at
best order-of-magnitude forecasts, they are probably the best anyone has to work from so far,
and they are likely to prove no more inaccurate for Australia than for any other country.
Taking 2013 as a baseline, the Australian Aircraft Register was analysed to determine how many
of the VH-registered fleet fell into the two categories covered by the ICAO estimates. The
assessment was based partly on the category of airworthiness certificate, and partly from what
we could ascertain about the identity and business of each registered operator. The estimated
total, as of mid-2013, stood at 531 jet cargo/passenger planes and 836 “others”. (Boeing’s later
estimate of 540 jets with over 30 seats for the whole of Oceania, as at January 2013, appears at
least broadly consistent with this estimate.) 17 On this basis the current Australian requirement
17
An analysis of the Register as at 31 July 2015 (Table 2.1) shows 529 VH-registered multi-engine turbofan
aircraft exceeding 7,500 kg MTOW, some of which may not hold a Transport CoA. No significance should
be placed on such small movements in the size and composition of the Register over a period as short as
two years, since fleet acquisitions and replacement tend to take place over a very uneven schedule.
164
would run out to 13,128 AMEs, of whom just over 4,000 would need to be licensed, assuming all
the necessary work were to be carried out onshore.
We then took the number of people who gave their occupation as AME in the 2011 census. This
is the only reliable way of determining the numbers employed in the occupation, as the other
available estimates (notably the Australian Bureau of Statistics Labour Force figures) are based
on a very small sample, and fluctuate wildly from quarter to quarter. From this we subtracted
the number who gave their industry of employment as Defence, Public Order and Safety or
Government (since the ICAO estimates exclude Defence or any other government-operated
aircraft) to reach an estimate of the employed civilian workforce. From that estimate we
subtracted 10% (probably an underestimate) to allow for attrition over the two years between
Census night and the third quarter of 2013, and added the maximum possible estimate of top-up
recruitment from Australian sources – i.e. the total number of apprenticeships at the relevant
level that had been completed between July 2011 and June 2013.
Bearing in mind that the ICAO’s benchmarks exclude a large part of GA, we applied a further
notional adjustment of 10% to cover the part of the workforce employed in GA. This is a very
conservative estimate,18 but squares broadly with an analysis of the workplace locations listed in
the Census, which showed that just over 11% of employed AMEs worked in a location not served
by high-capacity regular public transport (RPT) or close to a defence base, and hence were
probably engaged solely or primarily in GA maintenance.19
This left a current shortfall of just under 4,000 personnel (Table 10.3), though the available data
do not permit an estimate of the shortfall (if any) of licensed personnel. This figure was
converted into an adequacy ratio, expressing the estimated total number of AMEs available to
work on the relevant sections of the fleet as a percentage of the ICAO benchmark figure for a
fleet of this size and composition. The ratio we calculated for 2013 was around 70% - not
especially creditable, but probably explained by the amount of work already offshored rather
than just by under-resourcing within Australia.
A growth in the active workforce which kept pace with the ICAO benchmarks over the next 10
years would require a total of just under 20,000 workers in 2025 to match growth (a net increase
of just under 6,000 on the starting figure in 2015), plus another 4,000 to catch up on the baseyear deficiency (see Figure 10.5 below). Even this estimate is probably on the optimistic side,
since it assumes a simple linear growth path through to 2030, whereas the IATA and CAVOK
estimates both envisage a growth pattern in which the curve is steeper up to the early 2020s
than in the latter half of the period. Although this figure of 24,000 refers to the size of the
workforce at each point in time rather than the number of new trained recruits required over
this period (to cover not only net growth but retirements and other forms of attrition in the
existing workforce), the task still appears to exceed any foreseeable capacity of the Australian
18 ARSA estimates the business and general aviation component (which in their case includes turboshaft
helicopters but no piston-engined aircraft) at 30% of the total world heavy maintenance bill (ARSA, 2013,
p. 5). However, the US fleet includes a relatively large number of small corporate jets, which typically fly
more hours and have more complex maintenance requirements than the broader GA fleet, but which are
less strongly represented on the Australian register.
19
Despite the removal of the occupation from the Skilled Occupations List in 2013, Manufacturing Skills
Australia (MSA) in its submission to the review for 2015-16 noted a continuing shortage of suitably skilled
GA maintenance engineers, concentrated in regional locations (MSA, 2014).
165
training system, even if supplemented by a high level of skilled migration - something that will
prove increasingly difficult to achieve as the world market for specialist MRO labour grows
tighter.
Table 10. 3 Supply of qualified aircraft maintenance labour, Australia, relative to ICAO
benchmarks
Estimated requirement for CASA-registered jet passenger/cargo
and “other”, excluding Defence (ICAO benchmark ratios)
13,128
Employed persons at 31/7/2011 giving occupation as
Aircraft Mechanical Engineer (ANZSCO 3231)
14,489
Less Defence and government
-3,926
10.563
Less 2 years attrition @ 5% (ICAO standard assumption)
-1,052
9,507
+872
10,379
-1,038
9,341
Add total apprenticeship completions Q3 2011 to Q2 2013
(incl. Defence)
Less 10% assumed working in GA
Total estimated available workforce Q2 2013
9,341
3,787
Shortfall
Adequacy ratio
71%
Source: Australian Bureau of Statistics (ABS), 2012 Census 2011, adjusted to 30 June 2013
Given this constraint and the high discrepancy between ICAO and rival estimates of the demand
20 years out, it was appropriate to develop a second, less ambitious projection for forward
demand, based on a compromise between the ICAO and Boeing forecasts. This meant
calculating separate estimates, on different bases, for the jet passenger/freight and “other”
components of the fleet. For the former, we use the 4.4% annual growth rate estimated by
Boeing in its 2014 projections, which cover essentially the same portion of the overall fleet.
Taking the average ratio for Oceania of 13.9 skilled employees per aircraft which is assumed by
Boeing for 2033 (a figure broadly in line with its expectation for most other regions in the world),
we work on the assumption that this will be the true average at the end of the 20-year period,
while accepting the ICAO figure of 20 as the representative ratio at the beginning, and assume
that the transition from one to the other will be incremental over the full period. This
accommodates the common expectation within the industry that average maintenance labour
requirements will decline progressively as the new generation of aircraft comes into service.
Where the “other” component is concerned, we have retained the 3.1% average annual growth
rate predicted by ICAO in 2010. While falling below the most recent expectations of growth in
overall aviation activity, this latter remains a credible figure in our estimation, given
developments which can reasonably be expected in the overall composition of the Australian
fleet. In the first place, many of the turboprops used by regional airlines for RPT and/or charter
are likely to be progressively replaced by jets on the more thickly trafficked routes over the
forecast period, given the higher traffic volumes expected, the likelihood of major population
increases in many of the towns and cities along these routes, the wider availability of fuelefficient smaller regional jets over the next 20 years, and the likelihood of increasing
interoperability between the aircraft operating regional and interstate services if the domestic
industry remains horizontally integrated along its present lines. This part of the fleet can
therefore be expected to shift to the “jet passenger” category. Growth in the remaining “other”
category should remain below the average for jets and broadly in line with earlier ICAO
166
expectations, since we would expect most of the anticipated growth in the VH-registered GA
fleet to occur in categories like aerial work and flight training, and above all rotorcraft, which lie
outside the segments covered by the ICAO projections.
Adding the two figures, with their differential growth rates, produces a curve over the full period
which shows some of the convexity that would be expected from the IATA projections.
Compared against 2015 it would represent a net growth of a little under 3,000 – bearing in mind
that this estimate too starts from the number required to match the ICAO benchmark ratios as
at 2013, and further recruitment would be needed to catch up from the original shortfall. The
projected total workforce in 2025 is estimated at slightly under 17,000.
For the second exercise, we work from CAVOK’s 2015 estimates for “technicians” alone, on the
assumption that everyone listed in Australia in the AME occupation would fall into this category.
This conveniently bypasses the issue of whether the other projections include workers who are
not qualified to that level, but leaves us with an assumed starting point considerably lower than
the other two scenarios modelled here. If we take CAVOK’s projections at their face value, it is
reasonable to assume that in addition to the required growth in the supply of fully qualified
AMEs, the training system would also need to support around a third of this number again,
made up of people employed either in the supply chain or working on or around aircraft but not
requiring qualifications under Part 147. Although this latter workforce lies strictly outside the
scope of this study, it still needs to be borne in mind when calculating the overall requirement
for aircraft-related qualifications.
Remembering that this second exercise involves no judgement about the adequacy of the
present workforce, we take as our starting point the estimated population of AMEs in civilian
employment (approximately 9,100 at the start of calendar 2015), and model workforce growth
in line with CAVOK’s forecast of the net cumulative annual growth rate (CAGR) in the value of
world MRO output of 4.4% up to 2020, and 3.8% from 2021 to 2025. Once again this can only
result in a very rough estimate, since it takes no account either of the degree to which
technology will displace labour over the two periods, or of likely changes in the industry
structure which would affect the balance between highly labour-intensive segments with
relatively low growth potential (notably heavy airframe maintenance) and those which have very
high growth potential but a relatively low component of labour inputs (in particular, engine
maintenance). Nevertheless, it provides an order-of-magnitude figure which is no more subject
to error than the ICAO-based modelling, and sets a convenient lower bound on the output which
would be required of the training sector to fill the demand from within Australia. The resulting
total workforce estimate for 2025 comes out to slightly over 13,600, though the low starting
point means that the net growth from 2015 will still be in the neighbourhood of 4,500, this time
not requiring any additional allowance for catch-up.
Since Figure 10.2 shows significant discrepancies among the three curves, it is important to
remember the conceptual differences between the three sets of calculations. In particular, the
CAVOK curve starts from a much lower point than the other two because it takes as its point of
origin a real rather than a (presumed) optimal workforce size, and partly because it appears, so
far as we understand CAVOK’s terminology, to cover only persons requiring Part 147
qualifications. On their reckoning, it would be necessary to assume the need for an “associated”
labour component working without the legal requirement for such qualifications, either on
aircraft in an ancillary capacity, or in the MRO supply chain, which would add around another
30% to the total amount of labour required. It is unclear whether the forecasts on which the
other two curves are based include any part of that “associated” workforce.
167
22000
20000
18000
16000
14000
12000
10000
8000
2015
2016
2017
2018
ICAO
2019
2020
Composite
2021
2022
2023
2024
2025
CAVOK
Figure 10. 2 Alternative estimates of combined labour demand to 2033
The lower starting point also accounts for the obviously steeper slope on the CAVOK curve than
on the other two, since the latter are based on the optimal workforce required to accommodate
fleet growth, and require additional labour input to compensate for the continuing shortfall in
the workforce actually employed in Australia. For example, if the ICAO curve were to start at the
actual number for 2015, the growth required in net population over the ten years would come
out to more than 10,000. This comparison emphasises the fact that Australia starts in 2015 with
a substantial handicap because of the collapse of recruitment to the occupation over the last
four years in particular. This training deficit is important in assessing how realistic it would be for
Australia to generate sufficient new MRO capacity within the next decade to recover the amount
of work lost to offshore providers over the last decade.
10.4 Could Australia make up the gap?
How realistic is it to expect that the Australian training sector could meet the demands of such
an increase in output (leaving aside the obvious considerations of who would pay and where
they would be trained)?
A careful look at the performance of the system over the last five years (Figure 10.3) gives little
reason for optimism. Assuredly the number of apprenticeship completions at June 2013 showed
an increase of some 130% over the output at the beginning of the 2008. However, this reflects a
large spike in commencements which occurred in 2008 and has since been working its way
through the system. Completions peaked in the March quarter of 2013 and were running at 20%
below that peak a year later.
If we look at commencements instead, we see a virtually uninterrupted fall over the last five
years, with the total for 2013 less than half that recorded five years earlier. For the March
quarter (traditionally the busiest time for recruitment) the number of commencements in 2014
was the lowest this century and the third-lowest in the 20 years for which statistics are available.
At the same time the level of wastage (the combined impact of apprenticeship cancellations,
withdrawals, suspensions and expiry) shows a small but steady rise since 2007, both in its own
right and relative to commencements, with the loss of apprentices before completion increasing
by some 10% over that period. This in turn has an impact on the critical statistic of net
recruitment, made up of the number of new apprentices adjusted for the number who have
168
failed to complete their apprenticeships within the same time period; by March 2014 this net
figure was less than two thirds of that for commencements alone.
1000
900
800
700
600
500
400
300
200
100
Wastage
Dec-13
Commencements less wastage
Source: National Centre for Vocational Education Research (NCVER) Apprentices and Trainees, various
years March 2005 to March 2014?
Figure 10. 3 All AME apprenticeships by status - rolling 4-quarter average, 10 years to March
2014
The collapse of activity becomes even more conspicuous when we take into account the relative
contributions of the civilian and Defence sectors. Figure 10.4 below makes it graphically clear
how quickly the contribution of Defence establishments to the total training effort has risen,
relative to civilian employers, over this period, with the share of Defence rising from 28% to
77%. This graph, which tracks the rolling average number in training over four quarters, not only
illustrates the magnitude and importance of the spike in commencements in 2008, and how its
impact has tailed off in the last year, but makes it clear that this one-off surge in investment
occurred purely within the Defence sector. Civilian activity shows a steady decline over the last
five years, with the total number engaged at all points of the apprenticeship cycle falling by
around 17%.
2000
1800
1600
1400
1200
1000
800
600
400
200
0
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Civilian
Dec-10
Dec-11
Dec-12
Dec-13
Defence
Figure 10. 4 Apprentices in training by sector, 4-quarter rolling average, 10 years to March
2014
169
Mar-14
Jun-13
Sep-13
Dec-12
Mar-13
Jun-12
Sep-12
Dec-11
Mar-12
Jun-11
Sep-11
Dec-10
Mar-11
Jun-10
Sep-10
Dec-09
Mar-10
Jun-09
Completions
Sep-09
Dec-08
Mar-09
Jun-08
Commencements
Sep-08
Dec-07
Mar-08
Jun-07
Sep-07
Dec-06
Mar-07
Jun-06
Sep-06
Dec-05
Mar-06
Jun-05
Sep-05
Mar-05
0
The decline is perhaps clearest when we return to the crucial figure of net recruitment. While
the trend for civilian commencements was essentially flat (punctuated by a small increase in
2011-12), the trend of Defence commencements has plunged from its peak in 2008, effectively
re-joining the civilian curve by 2011.
There appears so far to be limited interest in reducing the recruitment deficit, at least on the
part of the major airlines, and on the basis of the traditional apprenticeship model. The crisis
within the formal training system – exemplified by the collapse of activity in leading-edge
Technical and Further Education (TAFE) institutions which once set national and even world
standards in the training of aircraft maintenance personnel - combines with the decline in
activity at the industry level to stifle Australia’s capacity to bring its output of skilled labour back
up to acceptable standards. With many of the most active workshops now closed, the
opportunity to provide workplace experience is becoming scarcer all the time. While the 10-year
rolling averages used in the above graphs are useful for evening out chance annual variations,
the actual figures for completions in particular spell out the problem much more starkly. In the
year between September 2013 and September 2014, overall apprenticeship completions
dropped by a third, while civilian completions went below 100 for the first time in nine years.20
At the same time, commencements have fallen away to the point where Australia is locked in to
a decline in recruitment, and hence in the size of the available workforce, until at least 2018.
The continuing decimation of the experienced workforce in the industry is leading towards the
decay of a resource of practical knowledge which in better times would have been available to
contribute to the practical learning of a new generation of apprentices. An impressive body of
such knowledge still remains in the active Australian workforce, albeit mostly concentrated on
more traditional aircraft technology. It would be wrong to dismiss this body of practical
knowledge as outdated given that the transition to new-generation technology is expected to be
a gradual one, with aircraft of the present generation (built roughly between 2000 and 2012) still
likely to make up a high proportion of the commercial fleet in the 2020s, by which time many of
them will be reaching the stage in their lifecycle when they will require more intensive
maintenance.21 Conversely, the present lack of mentors with a comparable depth of experience
on new-generation aircraft poses an additional challenge when it comes to developing the
workforce capability which Australia will need to exploit the new opportunities that may arise
from changing business models linked to new-generation airframes, a subject to be discussed in
more detail in Chapter 12.
At first sight, therefore, Australia seems ill placed to face a major world skills shortage. Yet if the
world shortage reaches the proportions identified by the international authorities, it seems
inevitable that Australia will eventually have to take back a significant part of the maintenance
load which is currently either already offshore, or in the process of being moved offshore.
Chapter 12 focuses primarily on the simple question: can this be done? and the less simple one:
if so, how? The remainder of this chapter addresses the question of whether it would be feasible
20
Statistics quoted from this point onwards are for the year to September, since the latest fully
disaggregated apprentice data to hand from the National Centre for Vocational Education Research
(NCVER) at the time of writing were for September 2014. The rapidity of the decline in training activity
makes it important to base projections on the most current available data. The value of their currency is
partly offset by the risk that setting the cutoff in September rather than at the end of the year may result
in an underestimate of the on-time completion rate. However, we believe this does not substantially
compromise the accuracy of the trends we have modelled, given that our calculations cover a total period
of 20 years (10 back, 10 forward) on the same basis.
21
CAVOK, 2015, p.35
170
at all, even in the most favourable of realistically foreseeable circumstances, to build up
Australia’s skilled workforce to the level required.
The necessary modelling of future workforce supply is complicated, as already mentioned, by
the uncertainty about our exact starting point. Estimating the present size of the active
workforce (defined for these purposes as the number of qualified persons who are either
currently employed or available immediately for employment in the occupation) is problematic
because the last fully reliable estimate dates from the 2011 Census. Official estimates of the
annual attrition rate varied widely from bulletin to bulletin right up to the point where the
occupation was removed from the Skilled Occupations List. The last one, released by the
Department of Employment in 2014,22 suggests an average of only 3.16% per annum over five
years, but earlier estimates, released by the former AWPA (Australian Workforce and
Productivity Agency) and DEEWR (Department of Education, Employment and Workplace
Relations) before the 2013 change of government, sometimes put that loss at well over 10 % in a
year.23, This reflects once again the problems that can arise from relying on Labour Force
statistics at this level of disaggregation 24.
For the sake of simplicity and comparability with other sources, we have used the standard ICAO
estimate of 5% annual attrition to calculate the projections in Figure 10.5 below. The active
population for each year is calculated by applying this adjustment to the corresponding
population in the previous year, and adding the number of apprenticeship completions in the
previous (not the current) year, working on the possibly optimistic assumption that every
graduating apprentice over the intervening period found a job in the occupation. Using the 2011
Census figure as our starting point, we estimate the active workforce in September 2014 at
13,473, reducing to 13,190 by September this year.
To project completions after 2014, we used data from the last ten years to calculate an average
on-time completion rate (i.e. completions in each year as a proportion of commencements four
years previously)25 of 78.7% for the two main civilian employing industries (Air and Space
Transport, and Aircraft Maintenance and Repair) and 97.5% for Defence apprentices. In
22
Department of Employment, 2014, p.36.
23
A 2012 Job Outlook bulletin (Department of Education, Employment and Workplace Relations (DEEWR),
2012b) showed a short-term decline in employment of 30.5% over two years. In a subsequent brief to
AWPA, recommending removal of the occupation from the Skilled Occupations List ((Department of
Education, Employment and Workplace Relations (DEEWR), 2012c), the Department estimated a 45%
reduction in employment over 5 years. An earlier bulletin in the same series, current to May 2011, showed
that even at a period when employment in the occupation had been growing, the proportion of workers
leaving the occupation in a year was around 11.3% (Department of Education, Employment and
Workplace Relations (DEEWR), 2012a; see also Australian Workforce and Productivity Agency (AWPA),
2012).
24
By way of comparison, a report released in August 2015 by the US Departments of Education, Labor and
Transport estimates total separations of aircraft mechanics and service technicians in that country for the
period between 2012 and 2022 at 73.4% of existing employment. Of these separations, only 34% were
predicted to occur as a result of exit from the workforce (i.e. retirement, death or permanent incapacity),
with the remainder resulting from transfer (whether voluntary or forced) to other occupations. (United
States Department of Education, 2015, p.48).
25
Our modelling is based on a four-year apprenticeship, i.e. the Certificate IV currently required to work as
an AME without signoff privileges. This is the level of qualification at which 97.6% of those in training over
the year to September 2014 were studying. In most cases, bringing these workers up to the licensed level
would require another year of formal training to convert their qualification to Diploma, plus at least the
same amount of work experience.
171
modelling the size of the civilian workforce, we assume that only those who have completed
civilian apprenticeships will enter civilian employment during this period, though in reality we
might expect a proportion of completing Defence apprentices to move to civilian work after
completing their initial period of engagement.26
15000
14000
13000
12000
11000
10000
9000
8000
7000
6000
2011
2012
2013
2014
Total active workforce
2015
2016
2017
2018
2019
Civilian workforce (base estimate)
Figure 10. 5 Change in size of Australian AME workforce, 2011-2019
(projected – see text)
Note, once again, that this trajectory is locked in until 2019 at the earliest. Even the most
ambitious increase in apprentice intakes from 2015 onwards would not alter it until the new
intake had worked its way through to join the qualified workforce. Working purely with
Australian-sourced labour, the only ways to lift either curve would be to reduce the duration of
the training (virtually impossible to do with trainees who are already in the system, even if the
legislation, the facilities and the approved curricula existed now), or to provide conversion
training to already qualified tradespeople in occupations sharing many of the same skill sets.
While the latter option is certainly worth consideration (and will be modelled later in this
section), there seems little likelihood that it could be practically implemented within the next 23 years, even supposing the will were there. The unavoidable conclusion is that for most of the
rest of this decade, Australia is condemned by its past underinvestment in training to fall steadily
further behind the rising demand curves. By 2019 (albeit based on some less than watertight
assumptions), Australia’s total and civilian active workforces in the occupation can be expected
respectively to have reached 79% and 74.5% of their 2011 levels – this in a context of steadily
rising world demand, coming on top of already entrenched undersupply in most regions.
The greatest problem to be overcome in any effort to rebuild the workforce is the impact of
attrition. As noted above, official Australian estimates of annual attrition in the years to 2013
ranged from a high of nearly 11% to a low of just over 3%, while forward projections prepared
26
It is important in this context to note the advice received from an industry insider that around 50% of
the civilian workforce at any given time is working on Defence aircraft. Since we have been unable to find
any statistical evidence to verify or qualify this advice, it has not been incorporated in these calculations.
However, it merits further investigation, since if confirmed, it would significantly complicate the task of
building up a workforce sufficient to meet the future needs of the civil fleet.
172
by the US government for its national labour market suggested an average annual attrition rate
of around 6.75% for the 12 years to 2022, regarded as a period of strong demand growth.
Working on the ICAO’s assumed standard rate, it would be necessary to raise the output of the
training system in each year by an amount equivalent to 5% of the number employed in that
year before the overall workforce size started to rise at all. To keep pace with the ICAO’s
estimate of 4.4% growth in the workforce required for the jet passenger/freight segment
(coincidentally matching CAVOK’s prediction for world MRO activity by value up to 2020), it
would thus be necessary to increase the output of qualified workers by a minimum of 9.4% in
each year, a severe challenge for the capacity of the training system – especially since at the
current wastage rate, this would mean raising apprentice intakes by almost 12%. Even this is
ignoring the existing backlog: to bring the predicted workforce in 2019 back to its 2011 size
would need an additional output of over 3,000 graduating apprentices.
Clearly the undertaking would be hopeless if all the figures – demand as well as supply - were to
remain at the levels shown in Figure 10.5. However, our modelling has shown that the projected
supply curve is sensitive to quite small changes in the wastage and attrition variables, both of
which are susceptible to significant change as a result of policy intervention, and our calculations
of what is feasible need to take this feature into account.
To illustrate how each of these features affects the outcome, we have modelled three notional
scenarios highlighting the impact of each possible measure. None of these appears especially
probable in the current state of the labour market; we have designed them to illustrate what
could happen rather than what necessarily will happen. All of them start with the assumption
that the apprentice intake will be sharply increased from next year, as no recovery is foreseeable
if commencements remain at their present rate. The figure we have chosen for our first set of
scenarios is 500 in 2016, rising by another 5% in each year. We consider this to be within the
potential capacity of the Australian training system, given that it falls below the three largest
annual intakes of apprentices in the last ten years (albeit as the combined intake of civilian and
Defence training institutions).
For our next projection we look at the effect, on top of the increased intakes, of raising civilian
completion rates to the same level as achieved by Defence, i.e. from its current six-year average
rate of 78.7% to the 95.7% rate in Defence establishments over the same period,27 and reducing
attrition to the maximum extent which is theoretically achievable. For the purposes of this
analysis we imagine the extreme case where every qualified worker entering the occupation at
the age of 25 remains employed in the occupation and is not motivated to change occupations
up to the current retirement age – i.e. where exit from the occupation occurs only as the result
of retirement. If such a situation were ever to apply, it would theoretically be possible to reduce
the long-term average attrition rate to 2.5%. Obviously we could not expect to see this
theoretical minimum feasible rate achieved in reality over any sustained period, but it remains
thinkable that by careful attention to continuity of employment and incentives to remain in the
occupation, the rate could be reduced to around that point by targeted interventions for short
periods, and held at a genuine 3.5% (i.e. more or less equivalent to the Department of
Employment’s last estimate of actual attrition over the five years to 2014) for a fairly extended
period.
27
It should be noted, though, that these figures are averages over six periods starting in 2005, and conceal
a high level of annual variation. This may partly be due to the September cutoff, which means that
completions which actually occur within four years of commencement may not be recorded until the
following year.
173
Figure 10.6 shows the results of these three scenarios, with the base scenario included for the
purposes of comparison, set against the growth in workforce required by our two alternative
demand scenarios. It is obvious that none of these, despite the bold assumptions involved,
brings the output usefully closer to either of the demand scenarios. Simply increasing the intake
does at least halt the decline from around 2019 onwards, though the trajectory from that point
on remains little more than flat. Increasing the on-time completion rate introduces some net
growth in the resultant workforce, but its impact is only marginal, suggesting a likely return to
the 2015 level somewhere before 2030. The largest single contribution comes from the third
scenario which combines these with a reduction in attrition to 2.5% per year. Manipulating this
factor brings the dip in numbers down to only around 700 by 2019, after which they begin to rise
encouragingly, though still not to the point where they would satisfy the likely demands of the
labour market.
17500
15500
13500
11500
9500
7500
5500
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
ICAO/Boeing composite
CAVOK (civilian)
Current trend
Increasing commencements
Reduced wastage
Reduced wastage, 2.5% attrition
2025
Figure 10.6 Four scenarios of civilian workforce growth, 2015-2025
(September quarter, allowing for attrition in year to September)
Even accepting that these initial scenarios involve investment at a level which we are unlikely to
see in the next few years at least, it becomes clear that much more heroic measures would be
needed to bring the workforce up to the required level within a decade. To begin with, any
serious attempt to rebuild the workforce will need to involve some kind of joint cooperation
between civilian and Defence training institutions, given the indisputable evidence in Figure 10.3
that Defence establishments have a capacity to cope with large one-off increases in the numbers
in training, which does not currently exist within the civilian sector. This assumption seems
reasonable in any case given the expectation, based on experience to date, that sooner or later a
significant proportion of the Defence maintenance workforce will move on into civilian work.
Over the next two decades we expect this crossover to be facilitated by three developments
currently in progress: the pressure on Defence establishments to outsource their maintenance,
or at any rate to have it done by civilian contractors rather than uniformed personnel; the
expected transfer of much Defence apprentice training to the RTO sector, predictably leading to
174
more commonality in course content and qualifications; and growing commonality between the
technology in use in civilian and Defence sectors, as technologies previously found only in
military aircraft (e.g. all-composite construction, fly-by-wire controls) find wider application in
the civilian fleet and common platforms come into use for non-combat aircraft such as the Orion
replacement. As a result we expect the future AME workforce to be increasingly involved
through independent MROs in a combination of civilian and Defence work, so that the two
workforces will no longer be as strictly segregated as has been the case so far.
However, even if attrition can somehow be controlled to the bare minimum, it is clear that other
inputs will be needed to bring about the necessary level of change. To this end we have
calculated two alternative projections for what we describe as “boost scenarios”, since they
would involve a major increase in effort by all parties, especially in the early years, to bring the
output of qualified workers significantly above the attrition rate and closer to the levels of
potential demand already calculated.
To begin with, it would be necessary to increase the growth in intakes to 10% (compounding) a
year above the initial intake of 500 in 2016. This looks challenging at first sight, but still lies
within the bounds of feasibility if Defence training facilities can be used to provide part of the
boost, as even with this acceleration, it would not be until 2022 that the total intake passed 843,
the maximum number that has been achieved by the combined sectors in a single year over the
past decade. Since the corresponding amount of training was being carried out as recently as
2008 (or actually 2011, when the number of apprentices at all stages of their training was at its
peak), the facilities should still be there (albeit mostly in Defence establishments), and there
should in principle be an adequate supply of suitably qualified teaching staff still potentially
available.
In a partial concession to realism, we raise the expected level of attrition to 3%, i.e. around the
level implied (however improbably) by the 2014 Department of Employment estimate for the
previous five years. We consider that it would be possible to hold attrition to around this level,
at least until around 2020, though a problem may arise after that because of the age profile of
the current workforce, which means that we can expect to see a spike of normal-age
retirements at the beginning of next decade. Ignoring that practicality, this set of assumptions
would be enough to bring the workforce back to roughly its 2011 level by around 2026.
However, it fails to address the key deficiency of all the other scenarios up to this point, namely
the big gap to the demand curves between around 2019 and 2021, when the skills shortage
seems most likely to have its strongest impact on Australia, and indeed on the world generally.
For our final and most ambitious scenario, we assume two important additions to the supply
which have not been covered in the projections so far. Firstly, we model the movement of
Defence-trained engineers into the civilian workforce. Our assumption here (largely notional, as
we have not been able to quantify the actual flow between sectors) is that one in three
completing Defence apprentices will move into civilian work three years after completion (i.e.,
after working out their initial period of engagement). Secondly, and perhaps more significantly,
we envisage a significant new accelerated component of training starting in 2016 and involving
four annual intakes, which takes workers with similar skill sets displaced by the decline in
manufacturing, and gives them a special two-year conversion training to qualify them as AMEs.
We put the number so retrained at 500 in each year – once again ambitious, but feasible in the
light of the amount of highly skilled labour likely to be shed from 2016 onwards as car
manufacturing closes down in Australia. Assuming every one of these completes the program on
schedule, this means an injection of 500 qualified recruits a year from 2018, two years before
any additional investment in ab-initio training could have any impact on the overall numbers in
the workforce.
175
This second boost scenario succeeds in bringing the workforce up to the point where it cuts the
CAVOK curve in 2022, and tracks it fairly closely for the next three years. Effectively, it puts an
“elbow” into the supply curve to bring it closer up the level of demand just at the point where
the skills crisis is likely to be biting in Australia. A similar supplementary program would have
equally useful consequences if it were added to one of the other, less ambitious strategies,
though it would not bring the total up to the curve within this time period. By contrast, the
transfer from Defence employment as modelled here does not contribute a great deal (a
maximum of 188 in any one year, largely because we hold the level of defence completions
constant at 120 after 2017), but would boost the size of the workforce appreciably in the longer
term.
17500
15500
13500
11500
9500
7500
5500
2015
2016
2017
2018
ICAO/Boeing composite
2019
2020
CAVOK (civilian)
2021
2022
Boost Scenario 1
2023
2024
Boost Scenario 2
Figure 10. 7 Civilian workforce growth under two high-investment scenarios
(September quarter, allowing for attrition in year to September)
We must stress once again that these calculations are put forward less as practical suggestions
than for illustrative purposes, to show how the labour market works, and how much time and
effort would be needed to bring the numbers in the skilled maintenance workforce back up from
their present low point. The assumptions have been unashamedly manipulated to produce the
best possible fit to at least one theoretical path of demand growth, and lend themselves to
further manipulation to support an infinity of alternative scenarios which would be just as
credible. Nevertheless, we feel confident that all the assumptions behind these models fall
within the feasible range, suggesting that if the market demand, the investment resources and
above all the political will were there, Australia’s aircraft maintenance capability could be built
up again over the next decade.
On the other hand, while it would be possible with sufficient determination to build up the
workforce in pace with the growth in global MRO activity, there seems based on these
calculations to be very little prospect of Australia returning within the next decade to a position
where it has sufficient skilled labour from its own resources to carry out all the work that has
been offshored over the last decade. None of the scenarios tested has come anywhere near the
composite ICAO/Boeing projection which lies at the lower end of the forecasts of labour need in
176
2025
relation to fleet size and composition. It may need to be acknowledged that this opportunity has
now been lost, for a long time if not definitively.
10.5 Conclusion
It seems increasingly clear that Australia is about to plunge unprepared into a world crisis of
undersupply in MRO skills. The effect of that shortage – already a reality in many parts of our
own region – will be to close off many of the easy options on which Australian carriers have
relied to contain their maintenance costs. Even where those options remain open, prices seem
certain to rise to the point where they will obliterate most or all of the savings which were
originally made by moving the work offshore. Unfortunately the point has been passed where it
would have been possible to undo the full consequences of ten years or more spent disinvesting
in onshore capacity and underinvesting in civilian labour force development, as there seems now
to be no practical prospect of Australia recovering the capacity to do all its own maintenance
within the foreseeable future.
Certainly Australia still could, and should, regain a substantial slice of work currently done
overseas. However, doing so would require a coordinated strategy that included combining the
capabilities of civilian and Defence training facilities, managing the level of wastage within the
civilian training system (e.g. through more stringent screening of applicants for apprenticeship
and creating certainty that jobs will be available after graduation), and above all, serious
investment in new training and retraining. More importantly still, it would mean applying the
brakes on the current rate of attrition among those already employed. This implies the need for
an immediate moratorium on further headcount reductions, backed up by incentives to retain
existing workers in the industry, since the calculations in the previous section demonstrate
clearly that Australia is doomed to fall further behind so long as it keeps prematurely shedding
experienced workers.
Realistically, such a strategy would also need to be judicious about which areas of work take
precedence for new investment. In particular, heavy airframe maintenance, now generally
recognised as a labour-intensive, low-margin segment, no longer looks like the first candidate for
onshoring — at any rate on economic grounds.28 Nevertheless, as the combined arguments of
chapters 6 to 8 suggest, there may well be a case for bringing more of it back on to Australian
soil on grounds of safety, reliability or other considerations not reflected in cost or dollar return.
Given that there are limits on the size of the skilled labour force which Australia can maintain
from its own efforts, it would probably make sense strategically to concentrate resources on
rebuilding capacity in an area such as engine overhaul where Australia’s labour costs do not put
it at such a cost disadvantage, and where the longer-term returns look like being sufficient to
justify patient investment over the next few years.
Yet if the skills crisis does develop to the extent some have forecast, a time may come – most
likely within the next five years – when Australian carriers will be grateful for any skilled workers
they can get on home soil. Just as importantly, so will our region. Based on the CAVOK estimates
of world technician population and our own projections of the Australian AME workforce since
2011, Australia in 2015 has some 2.65% of the world’s stock of qualified technicians. In 2010, the
ICAO estimated that the entire Asia-Pacific region had only 14% of the world maintenance
28
The economic case may change as the proportion of new-generation airframes in the fleet increases,
since major inspections and overhauls on these aircraft are likely to involve more sophisticated and less
labour-intensive processes, and OEMs are expected to take a greater share of heavy maintenance work on
their own products. In particular, Boeing’s strong on-ground presence in Australia may offer commercially
viable opportunities for onshore heavy maintenance on the 787 and subsequent designs.
177
workforce. While it is virtually certain that this latter ratio has shifted substantially in the
intervening five years, it remains a safe assumption that Australia’s MRO workforce represents a
substantial presence within the region, out of all proportion to its share of population or the size
of its register, which is likely to be in growing demand as supply falls further behind the
requirements of servicing the Asia-Pacific fleet. So long as Australia acts in time, there remains a
very strong likelihood that by the early 2020s we can become a net exporter, if not of MRO
services, then certainly of MRO skills and expertise.
The problem is that in 2015, though our most recent industry contacts have hinted at signs of
movement, the general impression is that market forces in Australia are not yet responding to
the anticipated spike in demand. As the calculations in the preceding section demonstrate, it is
not possible to bring about a major growth in the qualified Australian workforce overnight. If
Australia is to be in a position to seize the opportunities offered by the skills crisis, a major effort
will need to be made now. However, there appears currently to be little enthusiasm from either
the Commonwealth or the industry for making such an investment, and the training sector,
bound as it is to a “responsive” investment model, necessarily continues to trail behind
government and industry.
In other words, by the start of next decade, market forces alone could be enough to provide
employment for the entire surviving Australian skilled workforce, and to support the necessary
level of investment in workforce development. The challenge lies in bridging that gap until the
Australian market responds.
RECOMMENDATIONS
•
RECOMMENDATION 20: That an emergency initiative be funded to restore the
number of apprentices in aircraft maintenance engineering at least up to
replacement level.
•
RECOMMENDATION 21: That in view of the near certainty that the world faces a
serious shortage of qualified aircraft maintenance engineers, the occupation be
restored immediately to the Skilled Occupations List.
•
RECOMMENDATION 22: That immediate action be undertaken to identify the
reasons behind the current level of wastage within the civilian training system and
increase the rate of on-time completion.
•
RECOMMENDATION 23: That incentives be provided to airlines and MRO providers
to retain experienced L/AMEs in productive employment, pending a spontaneous
recovery of the labour market, in order that Australia should continue to have a
basis of expertise for training and mentoring the next generation of skilled workers.
178
Chapter 11 Aircraft Maintenance – Future Role in
Regional Development, Trade, Security and
Innovation
We turn to a consideration of how best to secure the economic contribution of the MRO
industry and its workforce to regional development, to economic self-sufficiency and export
earnings, to national security, and to innovation. The first step is to weigh the benefits and
costs of ensuring a strong role for an Australian aircraft maintenance, repair and overhaul
capability within a national aviation and aerospace industry.
11.1 Establishing impact, benefits and costs
We begin by identifying the most informative approach to determining the economic impact
of the MRO industry. In cases where there are externalities such as safety, national security,
regional development, and capacity for innovation, it is important to look beyond the annual
budget cycle and short-term shareholder profits, in order to assess an industry’s potential
impact through a longer-term public policy approach. The contribution of all stakeholders —
the three tiers of government, airports, training providers and associations of industry
stakeholders (employer and employee organisations) — need to be considered, alongside
the activities of individual air operators, original equipment manufacturers (OEMs),
manufacturing suppliers and MRO providers and contractors. In the volatile aviation
industry, the decisions of individual players such as air operators will almost of necessity
prioritise short-term shareholder value. In a version of the prisoner’s dilemma, costminimising maintenance approaches may then prevail over a longer-term investment
approach and actually stand in the way of the benefits of adaptive innovation that a longerterm perspective would otherwise bring to the industry collectively, and thus to the national
interest.
Metrics for calculating wider or longer term impacts of industry investment decisions
include public accounting tools, such as benefit/cost analysis. This approach is normally used
to choose between alternative investment decisions, based on a range of assumptions
about time frames, the imputed value of non-market items, and discount rates (the relative
social valuation of present and future benefits). Concepts used include: multiplier effects on
local or national economies; accelerator effects, for example of research and development
(R&D) ventures; and the spillover or diffusion effects of technology hubs, logistics chains or
skill ecosystems.1 In the case of aerospace, impact assessments need to consider lagged
effects and geographically diffuse impacts.2
The methodology for calculating local, regional, state and national multiplier and catalytic
effects is well developed in the US, particularly in relation to airport operation, where in
2008, no fewer than 58 such analyses were reviewed in a study carried out by Karlsson et al.
for Federal Aviation Administration (FAA), under the auspices of the United States (US)
11
Boddy and Lovering, 1986; Finegold, 1999.
2
Cole, 1989; Nioso and Maljinda, 2005. An Oxford Economic Forecasting (2006) study estimated the
“ripple” effect of air transport usage across Europe over the previous decade as a 4% GDP increase,
through direct impacts on trade and tourism, and catalytic impacts on business investment and
productivity.
179
National Academies of the Sciences.3 The review identified three main impact assessment
methodologies. The first is the input-out method, typically summing impacts that are direct
(site-based), indirect (off-site) and induced (generated economy-wide by successive rounds
of spending). The second approach is the collection of benefits method, which assigns a
value to quantitative and qualitative indicators of benefits and costs (such as time saved,
capacity stimulation, social amenity and community benefits). The third approach is the
catalytic or spillover method, identifying flow-on impacts on trade, investment and
productivity.
The 2013 NSW Business Chamber study of the Economic Impact of a Western Sydney Airport,
conducted by Deloitte, applied the second of these methodologies.4 Whilst convincingly argued
in the areas it covered, the Deloitte study focused heavily on the multiplier impact of passenger
numbers and freight volume in building local service industries and did not consider the role of
maintenance, maintenance training and the embeddedness of maintenance work in a
technologically advanced manufacturing supply chain. The Karlsson review had found that other
omissions were common in airport studies, and we add in brackets further aspects particularly
relevant to MRO work:
Integration into global supply chains (including aircraft on the ground (AOG) work);
•
Adjacent commercial development attracted to the vicinity (including manufacturers in
the supply chain of components and processes used in MRO workshops);
•
Reliance on aviation by industries such as research and development (and maintenance
and flight training organisations);
•
Growth in general aviation specialty modes such as business aviation, fractional
ownership, very light jets in the context of globalisation, and the attendant maintenance
business opportunities.
Even without these further impacts, the most conservative estimates typically calculate the
value of indirect benefits as double that of the direct economic contribution.
A specific US example is available of the impact when an airport, with local and state
government support, attracted an aerospace manufacturing organisation to establish new
maintenance and manufacturing facilities onsite. Beginning in 2006, Savannah Airport
Corporation, Georgia, offered infrastructural incentives for Gulfstream to establish a $300m
maintenance facility. Subsequently, with support from the Georgia state government in the form
of tax incentives and 300 subsidised training places, Gulfstream added facilities for
manufacturing, aircraft painting, R&D and a global parts distribution hub, as well as establishing
linked maintenance facilities interstate. The development is estimated to have created 2,900
direct jobs between 2006 and 2015, and to have provided a net fiscal return to Georgia that was
more than double government outlays.5
Another type of impact analysis carried out in the US is represented by periodic efforts to
quantify the contribution of the general aviation (GA) sector as a whole to the national
economy. These studies are commissioned from PricewaterhouseCoopers by eight industry
associations working in the GA sector.6 This group of associations, and hence the impact
3
Karlsson et al., 2008.
4
Deloitte Access Economics, 2012.
5
Lynch, 2014; Markiewitz, 2010; Mayle, 2014, Swickard, 2010.
6
PricewaterhouseCoopers (PwC), 2015.
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Chapter 11 - Aircraft Maintenance - Future Role in Regional Development, Trade, Security and
Innovation
analysis, cover aircraft manufacture as well as operation and maintenance. In the US, the GA
sector is defined, not in terms of aircraft weight, but in terms of activity: it includes all FAAairworthiness-certified aircraft not used for military or scheduled passenger flights, and thus
includes business jets. Based on 2013 data, covering flight operations, component manufacture,
maintenance and other activities, the study estimated impacts in terms of direct GA industry
activity, indirect supply chain activity, induced employee and proprietor spending based on
income from such activity, and enabled spending by visiting passengers. It found GA to have
contributed between 0.6% and 0.75% of all US employment, income, output and gross domestic
product (GDP). The total impact was approximately 4 times the direct impact in the case of
employment and GDP and 3 times the direct impact in the case of income and output. 7 In other
words, each job in GA created 3 other jobs, and each dollar of output created two more dollars’
worth of output elsewhere in the economy.
These findings, from different types of impact studies, all seem to suggest that indirect social
and economic returns from outlays in the aviation/aerospace industry have a value that is at the
very least twice the value of direct outlays. To this return can be added the potential benefit if
Australia moves quickly to meet the emerging maintenance and maintenance training gap in the
Asia Pacific region, identified in Chapter 9. It is for these reasons that the support of
governments at all levels, and coordinated action by aviation and aerospace industry bodies, are
needed, in order to bring about overall benefits that could considerably outstrip the total impact
of isolated initiatives.
11.2 Aviation/aerospace - hubs, clusters or networks?
The rest of this chapter examines the potential contribution of MRO and related manufacturing
work under the four headings of the chapter title: regional development; trade balance (national
aviation self-sufficiency and export potential); defence security and contribution to
manufacturing innovation. It is somewhat artificial to isolate these benefits, because the best
way of achieving them is through inter-related “lobes” of activities that are part of
aviation/aerospace hubs, clusters or networks (Figure 11.1).
Figure 11.1 Potential benefits of aviation/aerospace hubs, clusters and networks
The concept of a “hub” is often used to describe geographically-concentrated clusters of
aerospace and aviation activity, generally focused on an airport. For example the Chinese
government is reportedly investing heavily in building an aviation hub or “airport city” at
7
PricewaterhouseCoopers (PwC), 2015.
181
Zhengzhou in land-locked Henan province. The elements of this airport cluster are international
and national freight and passenger transport, linked to rail and highway development. The
Chinese government has negotiated a memorandum of understanding with Boeing to explore
the future introduction of aircraft assembly line, distribution and maintenance capacity in
Zhengzhou.8 This is a top-down model, heavily dependent on government infrastructure
investment and planning.
There has been no shortage of other attempts to create “aerospace hubs”, some top-down (Abu
Dhabi; Asia Aerospace City in Sebang, Malaysia),9,others based on local initiative (Dayton,
Ohio).10 If only because of differences in geographical concentration, the Changi MRO cluster or
over 100 companies – estimated to be 20% of the Asia-Pacific MRO market 11 – is not likely to be
replicated in Australia. There was an unsuccessful attempt to create a “precinct” or hub around
Avalon in 2013. It may be thought that the “hub” idea has been overworked, and that heavy
investment in infrastructure is insufficient if the technological traditions and skills base are
missing. Nevertheless, it will be argued below that Adelaide/Parafield and Williamtown are
emerging as geographically-concentrated hubs, and that a greenfield site such as Badgerys
Creek, is well-placed to form the nucleus of aircraft maintenance and maintenance training, in
large part because of the existing concentration of defence contractors, small to medium MROs
and aerospace manufacturers in Western and Southwestern Sydney.
Geographical concentration is not the only model for fostering the development of the industry:
regional clusters and supply networks may be more geographically dispersed. The Queensland
government has since 2011 been promoting the whole state as “An Asia Pacific aviation and
aerospace hub”, claiming over 900 aviation and aerospace companies (said to be 30% of the
national number).12 Action plans such as that of the Queensland government, depend on public
subsidies. They may either seek to attract businesses or support local businesses in export
drives. The Queensland initiative adopts a wider definition of a “hub” than one based on a single
airport identifying cluster strengths – pilot training for the Gold and Sunshine Coasts, GA around
Wide Bay and Burnett; Defence links in Rockhampton-Townsville.
The notion of “cluster” is a better one than “hub” for describing such geographically dispersed
networks, organically linked from “below”, through the initiative, for example, of industry
organisations. An example relevant to Australia is the Polish Aviation Valley Association, formed
in 2003, as a non-profit organisation with the objective of accelerating the development of the
aerospace industry in south-eastern Poland. With a 2014 membership of 125 organisations, the
Association aims to create a low cost supply chain of reliable sub-contractors, foster aerospace
research and skill formation in order to improve the manufacturing base, attract foreign
investors and protect aerospace businesses, influence government economic policy and develop
8
Andrews, 2015; Li, 2014.
9
Al Majed, Z (2009); Asia Aerospace City (AAC), 2015.
10
Ohio Aerospace Hub (n.d.).
11
Civil Aviation Authority Singapore (CAAS), 2015.
12
Asia-Pacific Development Reporter (APDR), 2011. This figure implies 3,000 nationally, compared with
the 923 listed in Chapter 3. The discrepancy can be explained by our non-inclusion of small air operators
with no maintenance capability, our counting only the headquarter state for companies with a presence
across several states, and our culling-out of any firms whose current MRO-linked activity could not be
verified from a website).
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Innovation
a relationship with other centres of the aerospace industry. It has been able to attract significant
funding from OEMs such as Pratt & Whitney, Agusta Westland and Sikorsky. 13
In Australia, there is a range of aerospace and aviation networks, aimed at sharing industry
information and raising the profile of the industry. We return in Section 11.8 to a way of using
such networks as an industry-government-airport catalyst to in interweaving and leveraging the
four main types to be reaped from building a national, export-focused MRO industry: regional
development; national economic self-sufficiency, defence security, and innovation. First,
however we discuss in turn and in more detail, each of the four benefits.
11.3 Regional development
Earlier chapters have documented the pivotal role played by safe, well-maintained aviation
services in ensuring quality of life in regional and remote Australia. It has been demonstrated
that regional airlines are particularly vulnerable when they operate routes carrying less than
30,000 passengers a year, that their fleets are considerably older than those on main route
regional public transport (RPT) airlines, and that efforts to convert charter operations into RPT
using smaller aircraft at or under the upper GA weight cut-off have been hampered by the lack
of maintenance services. The latter problem has arisen from the (necessary) safety requirement
that RPT aircraft be maintained by Part 145 approved maintenance organisations (AMOs),
whereas most regional and rural GA sector MROs have not yet been able to complete the
expositions required. Small operators in the regional and GA sectors have been particularly hard
hit by the skill recognition problems attendant on the transition to the European Aviation Safety
Agency (EASA) system. On the higher volume routes, the 30 regional airlines in Australia are
operated by a mix of major airline subsidiaries, several low cost carriers (LCCs), and locally and
overseas owned carriers. Many carry out maintenance in-house or use tied or independent
MROs.
Chapter 3 noted that a 2014 NSW Parliamentary Committee recommended that regional RPT be
classed as an essential service, and reported the Committee’s finding that some regional and
rural airports were being maintained at a loss by local government authorities because of the
vital role of these airports in rural fire and medical services. The 2015 Federal budget has made
provision for a 4-year RAAP (Rural Airport Access Program) to provide support for remote nonviable but essential aviation services and for airport upgrades. Unfortunately, support for MRO
activities is not part of this arrangement.14 Support for remote-area sign-off of MRO work
remains an unresolved issue. Local government authorities have adopted various strategies to
maintain the airports for which they have been responsible since the early 1990s and to address
the MRO issue. Coonamble Shire has reported plans to employ a licensed aircraft maintenance
engineer (LAME) on its payroll, in order to provide local sign-off for MRO work. Temora has
made a (fully-subscribed) release of land and hangar sites adjacent to the airport to attract
recreational aviators, in an effort to cross-subsidise other aviation and MRO work.15
Several larger regional centres have also made judicious use of government support in order to
attract air operators and MRO activity. Tamworth Council was able to use a contract with BAE
Systems for the use of the airport in the provision of basic Australian Defence Force pilot
training, as the basis for establishing a control tower and subsequently for becoming a secure
airport. As noted in Chapter 3, by contributing with State government support to the
13
Aviation Valley, 2014.
14
Department of Infrastructure and Regional Development (DIRD), 2015.
15
NSW Parliament Legislative Council, 2014, pp. 70-71.
183
construction of hangar space, the Council was then able to attract Qantaslink to undertake
heavy maintenance of its Dash-8 fleet. In 2015, BAE Systems transferred its contract to
Gippsland, so it is to be hoped that Tamworth Airport will continue to function as a training hub,
based on networked arrangements between TAFE New England and South Western Sydney
Institute of TAFE for joint delivery of offshore flight and maintenance training, for example to
the Chinese market.
A further success story of the contribution of MRO to a regional economy is that of Williamtown
airport outside Newcastle in the NSW Hunter Region. This example also illustrates the
contribution of MRO national security, as Williamtown is one of several airports shared between
Defence (the RAAF) and local government (In this case Newcastle City and Port Stephens Shire
Councils). Jetstar, Qantaslink, Virgin, the regional airline Rex and small phoenix carrier FlyPelican
currently use the airport, and the airport is exploring a contract with Air Asia. At present the
largest aircraft to use the airport are Virgin’s B737-800s, although there is runway capacity for
heavy widebodied aircraft. Jetstar inherited Qantas’ Williamtown maintenance hangars and
upgraded them in 2005 as the ongoing site for its A320 fleet maintenance. Recent and planned
extensions include apron upgrades for aircraft up to the A380 and B787. With infrastructure and
financial support from the state government, adjacent civilian and Defence airport facilities have
been undergoing rapid development, successfully attracting tenants such as Lockheed Martin,
and contracts for ongoing and expanded activities by BAE Systems and Jetstar. Very significant
regional multiplier effects have been attributed, not only to the Defence presence, but also to
the Hunter network of small and medium manufacturing, engineering and technology firms that
are being sustained by their roles in supplying airport MRO operations.16
The examples of Newcastle and Tamworth, however, are hardly typical of the rural and remote
end of the non-urban spectrum. Chapter 3 has identified the need for a new RPT/charter
interface at the borders between the GA and regional aviation sectors, as well as the need for
innovation in the GA sector. At the moment, sectoral investment in innovation, such as very fast
turboprops, is just beginning – with the first quarter’s CASA-approved charter operation of a
TMB 850, leased by Wagga Air Centre from a rural doctor.17 A rural and regional aviation and
maintenance innovation fund, to support the renovation of air operation in the sector, is greatly
needed.
Northern Territory aviation illustrates some of the turbulence associated with the regional
airline sector, and the characteristics of a small mixed-function GA sector. Regional airline
Vincent Airlines collapsed in 2012, and from 2015, 85% of the former Capiteq ownership of Air
North is now with Western Australia based global civilian/Defence contractor Bristow. Both Air
North and the regional airline/charter operator Hardy Aviation, with its small aircraft subsidiary
Fly Tiwi, operate out of Darwin, and along with RPT/charter operator Chartair, are the only three
Northern Territory operators with Part 42 Continuing Airworthiness Management Organisation
(CAMO) approval. Maintenance for Air North is carried out by tied contractor Capiteq/Air
Logistics. Hardy and Chartair also have Part 145 AMO status.18 Several helicopter operators have
in-house maintenance capacity. At last count in late 2014, there were a further 6 MROs servicing
the GA sector in Darwin and 8 in regional and rural areas, including one in Alice Springs and one
in Katherine, ranging from avionics specialists through AOG service providers to mixed chartermaintenance businesses. It goes without saying that the Northern Territory is heavily dependent
on aviation and hence on the MRO work that keeps its aircraft flying.
16
Williamtown Aerospace Centre, 2015.
17
TMB Daher, 2015.
18
Australian Broadcasting Corporation (ABC). 2014; Bristow, 2015; CASA, 2015b; Hardy Aviation, 2015;
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Innovation
Chapter 3 provided figures suggesting that, in numerical terms, GA operation, mainly charter
and aerial work, accounts for 91% of fixed-wing aircraft and 76% of independent MRO
businesses. An urgent case can be made for supporting the economically-vital rural and regional
aviation sector, by assisting operators and MROs, particularly in the GA sector, to update their
capacity and have it recognised. The most urgent need is to attend to the outstanding problems
of licence recognition, skill upgrading and maintenance organisation and maintenance
management approval, resulting from the very drawn-out process of completing the regulatory
basis of the transition, in a way that does not preclude the continued use of long-standing
expertise.
11.4 Trade balance: National self-sufficiency and export potential
Aircraft maintenance is an area of work with high export potential in an increasingly
undersupplied world market, and governments should therefore provide the kinds of assistance
and investment appropriate to an emerging export industry.
So far as the home market goes, a concerted policy effort is required, involving governments,
airports, third-party MROs and OEMs as well as full utilisation of the airlines’ own maintenance
capacity, to repatriate as much heavy maintenance as possible within the few years before the
skills crisis really begins to bite. This repatriation could most easily start with the domestic
single-aisle fleet for which suitable facilities already exist in Australia, but it will also be
important to seek out opportunities in the widebody segment as the number of widebodies in
service on domestic routes grows to the level that would make this economic.
In all these regards, the 21 federally-leased airports, working with government at all three levels,
can make an important contribution to ensuring that Airport Master Planning processes,
undertaken every five years, are fully integrated into the project of working with air operators,
MROs and OEMs in order to rebuild Australian maintenance and maintenance training and
ensure the infrastructure that will allow Australia to play a leading role in meeting the projected
Asia-Pacific maintenance and maintenance training shortfall.
The example of Brisbane Airport is instructive. Its 2014-2034 Master Plan pitches the airport as a
focus for both national and state economic activity, and also as an international gateway.
Although Archerfield is the main GA airport, the Brisbane plan also makes provision for
expanded GA operations and business jet services. The plan allocates two new areas within the
precinct for expanded maintenance work via runway and landside access, and new hangar
facilities; as well as paint shops, and accommodation for upholstery repair, instrumentation, and
component supply and maintenance; and for “associated training and education facilities”. It
also makes explicit provision for a wide range of industry and business uses, including
manufacturing. Specifically identified are clean low impact industry research and technology
facilities, knowledge creation and entrepreneurial activities and service industries compatible
with urban areas (p. 85). The Plan caters for expansion by existing operators/OEMs (Qantas
Airways, Virgin Australia, Five Star Aviation, Alliance Airlines and Airbus) and for attracting new
airlines, and further relocations.19 It is not altogether surprising then, that Qantas has used
Brisbane airport for the refurbishment of its A330s, and that two of the nation’s five Part 147
Category training MTOs are in Brisbane.
Where smaller aircraft are concerned, there is doubtless a temptation to assume that the
Australian market is already captive and needs no further courting. However, this assumption
ignores the acute requirements of the regional and rural aviation sector, identified in the
19
Brisbane Airport Corporation, 2014, pp. 70-83.
185
previous section, along with the ageing of the regional and GA fleets, and the impending
requirement for new maintenance techniques and conversions, for example the installation of
avionics upgrades in smaller fixed and rotary wing aircraft. It also ignores the growing pressures,
especially among private aircraft operators, to seek exemption from the requirements of VHregistration, either by modifying their aircraft to qualify for the less demanding scheme
administered by Recreational Aviation Australia, or by lobbying to have similar provisions
extended to other small non-commercial aircraft. Indeed, there may well be a small but
continuing consumer-driven market for third-party maintenance in non-VH recreational aviation
even where regular inspections and overhauls are no longer strictly required by law, and may
leave something to be desired in terms of regulatory stringency.
Looking further afield, there is also an opportunity to make Australia a regional service training
hub for heavy maintenance and AOG services in the emerging and maturing helicopter, regional
jet and business jet markets. With countries like China just entering the business jet scene, and
yet to unleash the growth of GA, Australia would arguably have a first-mover advantage if it
geared up to be both an exporter of on-ground maintenance services outside Australia, and an
exporter of GA maintenance training. By combining both these avenues of potential expansion,
it might be possible for GA maintenance providers to build up the economies of scale which
many of them currently lack.
The helicopter market offers particular opportunities for exploration. For example Parafield
TAFE, in South Australia,20is well placed to provide training in the installation of the helicopter
autopilot upgrades now available.21 The international MRO provider Helisota has recently
commented on the maintenance skills gap in Brazil and other Latin American countries, resulting
from the rapid growth of the helicopter industry. Helisota, Agusta Westland and Russian
Helicopters are reportedly all planning to open South Pacific helicopter maintenance bases, but
have expressed concern at the lack of skills training.22 With Agusta Westland already a Sydneybased CASA-approved Part 147 type training organisation, there is an opportunity here to
provide the international training market. With the right government assistance, there is a real
opportunity for Australia to provide Southern Hemisphere helicopter maintenance training
capability.
11.5 Security
Safeguarding the strength of Australia’s civilian MRO capability is in the last instance an issue of
national security. Without domestic reserves of capability, Australia is dependent on offshore
sources of MRO supply. Such supply lines would be vulnerable to disruption under certain
international relations scenarios which may not involve outright hostilities but could be as
simple as the refocusing of other nations’ aviation/aerospace efforts.
Civilian contractors to the Australian Defence Forces tend to operate at the developmental and
non-routine end of MRO work, and thereby contribute to a deepening of national MRO
expertise. At this end of the spectrum, there is a continuum between MRO, OEM and Tier
1/Nadcap accredited supply chain work. The interlinking of Defence and civilian MRO work is to
mutual benefit. The requirements of large civilian and Defence MROs call forth the project work-
20
During the course of writing this report, we understand that Parafield was close to gaining, or had
gained, Civil Aviation Safety Authority (CASA) Part 147 category training approval, although the fact was
not reflected on the CASA website.
21
Rotor and Wing, 2015a.
22
Rotor and Wing, 2015b.
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Innovation
based development of specialist techniques from advanced manufacturers. The application of
these techniques tends to flow back and forth between Defence and civilian OEMs/MROs. The
implication is that an erosion of this non-standard capability in both MRO work and advanced
manufacturing, and a “thinning out” of the critical mass of skill in which the organisations using
these technologies are participants, would constitute risks to national technological selfsufficiency, and could ultimately pose a security risk.
Examples of the civilian/Defence interface are listed in Appendix 3.23
At the airport level, both civil and Defence aviation stand to benefit from interaction. A number
of airports are leased from the Department of Defence, unlike the 21 major civilian airports
leased from the Department of Infrastructure and Regional Development. Newcastle Airport,
already mentioned as a regional development exemplar, is a tenant of the Department of
Defence. The RAAF provides infrastructure and services to civilian air operations at the airport,
including an instrument-landing runway, able to take B737-800s and wide-bodied aircraft,
staffing of the control tower and emergency safety services. The exchange works both ways: BAE
Systems has had a presence at the adjacent Williamtown Aerospace Centre for almost 20 years,
assembling two-thirds of the RAAF’s Hawk 127 Lead in Fighters, and collaborating with the
training supplier CAE to install customized flight-training simulators. In August 2015 BAE Systems
concluded a new contract, involving the recruitment of 116 new employees, to deliver “deeper
and operational maintenance” to the Hawk fleet.24 Townsville airport is partly leased from the
Department of Infrastructure and Regional Development and jointly operated by the
Department of Defence and Townsville Airport Pty Ltd, with the Department of Defence having
control of runways and taxiways. In its most recent Master Plan,25 the airport made provision
for a post maintenance and testing facility in the aviation precinct — a further indication of the
overall argument that civilian MRO capability is intertwined with Defence activity in such a way
that the erosion of civilian MRO capacity will be to the detriment of national security.
The restriction of our current project to the future of the civilian MRO has prevented a detailed
analysis of the interaction between Defence and civilian MRO work: a follow-up project focusing
on Defence MRO work and training is required. What we have been able to ascertain, from the
708 respondents to Wave 1 of our 2013 AME survey, is that,
A total of 118 (17%) had begun their maintenance working lives in Defence;
Of these, the largest number (50) had ended up in Qantas, with another 21 finding their way into
GA or helicopter maintenance and 14 into work with independent MROs;
Only one person reported beginning in civilian MRO work and ending up in Defence.
These figures probably reflect the simple fact that our survey was not distributed amongst
maintenance engineers currently working in the Defence services. But they may signal the future
possible benefits of a closer alignment of training and safety standards between the two sectors.
The examples provided, however, make one key point. A thriving Australian MRO capability,
including a capacity for heavy airframe maintenance and component overhaul, is needed to
enhance our capacity to take a role as a self-reliant nation in the region, working with OEMs, to
participate in the civilian developmental and modification work that provides our Defence
23
In Appendix 3, see the Defence contracting and supply chain examples among the brief case studies
under Tables A3.1 to A3.5.
24
BAE Systems, 2015b.
25
Townsville Airport Pty Ltd. 2011
187
services with advanced capabilities. The end result of diminishing our MRO training effort would
be to risk compromising our national security.
11.6 Innovation
Whilst Australia is at the moment a long way from being able to compete in the global MRO
market in terms of volume, it can gear up to contribute to the impending shortfall, focusing
particularly on niche markets, quality and innovation. The capacity for innovation is a reason
why Australia is Boeing’s second largest footprint outside the US, why Airbus has acquired a
local presence through the acquisition of Australian Aerospace, and why the Swiss OEM RUAG in
2012 acquired Rosebank in Melbourne, employing its staff of over 100. It is almost as if OEMs
have a better understanding of the value of the Australian skills base than the air operators.
Dr Ian Thomas, delivering the 55th Annual Kingsford Smith Lecture to the Royal Aeronautical
Society as President of Boeing Australia South Pacific in 2013, noted that in integrated global
supply chains, nimbleness is rewarded and Australia is “in there with a chance”, because the key
challenge is “not big beats small but quick beats slow”. He outlined the importance of
integrating R&D with manufacturing in a design/make/deliver model. As we have seen in earlier
chapters, the growing importance of afterservice means that the model has become one of
design/make/deliver/ maintain/repair/recycle. Maintenance capability is increasingly interlinked
with manufacturing capability, both in terms of theoretical understanding, and in terms of
working with the technology. Dr Thomas expressed the view that in developing automation,
biomaterials, nanotechnology, robotics, molecular precision, flexible fabrics, micro production,
and in the creation of light cheap high quality parts, Australia has a solid future and “can
compete in the Asian century”.26
The question then becomes one of whether the Australian MRO industry will be in a position to
participate in this same nimbleness of response, in helping to meet the coming national and
Asia-Pacific demand shortfall. What part can Australia potentially play, in meeting the ongoing
need for maintenance, upgrading and parts recycling of aircraft such as B737s, which will
continue to comprise half the global market until 2025? How well are Australian MROs being
assisted to implement advanced diagnostic techniques on existing aircraft, such as hull-scanning
robots and non-destructive testing of wheel assemblies and engines?27
None of the examples in this chapter gives rise to confidence that air operators on their own are
in a position to be initiators, rather than adopters, of innovation. A national aviation/aerospace
innovation strategy is needed, in order to identify strategic approaches to capitalising on the full
potential contribution of aircraft MRO to the future of the industry as it transitions.
11.7 Capitalising on the full potential contribution of MRO to
aerospace/aviation industry development
This chapter has established that approaches to achieving the four goals of aerospace/aviation
industry development — regional development, enhancing the balance of trade through
supporting national self-sufficiency export potential, defence security and innovation — are
intertwined.
Following on from Chapter 3, it has illustrated how MRO work contributes to, and/or benefits
from, the work of:
26
Thomas, 2013.
27
Kivits, Charles and Ryan, 2010. .
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Innovation
•
Air operators in the international, main route domestic, regional and GA sectors, both as
in-house maintainers and as contractors of maintenance services;
•
Contractors to Defence, supplying a range of equipment and services, from wholeaircraft reconfiguration, through logistics, to the design and installation of integrated
systems, and component through-life-service;
•
Independent MROs, providing routine maintenance checks through repair, testing, onwing and major component overhaul, interior reconfiguration and refitting, and nose-totail exterior repair and repainting, operating within and across the airline and GA
sectors;
•
OEMs and their supply networks of manufacturing and afterservice maintenance
providers;
•
Providers of MRO training, and maintainers of flight training equipment;
•
Providers of aviation services such as full-service leasing;
•
Providers of technical services ranging from maintenance management and auditing to
the writing of manuals, testing and (re-)design approval.
The providers of these services may be linked together in supply chains, process networks and
webs of interdependence. The linkages may be thought of in terms of hubs, clusters or supply
networks; they may be collaborative or competitive or both at once; they may involve the
sharing of information and resources; and they may or may not involve regional proximity.
Whilst Sydney airport is by far the busiest in Australia in terms of line maintenance, and has
under-utilised engine overhaul capacity, we focus here on the lost opportunities for meeting
future MRO demand that will occur if airport master planning processes focus on passenger
revenue to the exclusion of MRO, maintenance training and maintenance R&D activity. While
similar analyses could be carried out for other states/territories, the example analysed here is
based on the very large Western and South Western sub-region of Sydney and environs,
clustering around the second airport site, and potentially networked to civilian and Defence
precincts stretching from Bankstown at its eastern end to the Illawarra in the south and to the
Nepean and Hawkesbury regions in the north-west.
Planning for the new Sydney second airport at Badgerys Creek offers the opportunity to develop
a specialised MRO hub, networked to civilian and Australian Defence Force MROs and OEMs
elsewhere, including interstate. The second airport is located in a high-unemployment area that
will benefit greatly from maintenance/aerospace industry development. It contains a range of
technology parks housing engineering firms that are eager to embrace innovation. There are
active programs to draw school students into science and technology. The region also contains
two of Australia’s five Part 147 category maintenance training organisations (MTOs) with the will
and capacity to expand both maintenance and flight training as an export industry. What is
required is catalytic support.
With runways built to handle heavier aircraft than the busy Bankstown airport can
accommodate, and located within the Nowra/Richmond/Glenbrook network of the various
Defence arms, as well as within Western and Southwestern Sydney advanced manufacturing
networks, Badgerys Creek could provide a future focus for an innovative MRO and MRO training
industry. Our conservative mapping exercise was able to identify 102 aerospace-linked
organisations in the region, including GA air operators, Defence contractors, third party MRO
and GA MROs; OEMs; providers of maintenance and flight training; providers of aviation services
such as parts sales, aircraft sales or leasing; manufacturing and engineering firms supplying
tooling, precision components and advanced manufacturing processes; and professional service
firms, providing testing, inspection, design or reconfiguration approval services (Appendix 3).
189
With a systematisation of support for local and international networking and information
exchange; with investment finance based on favourable terms and guarantees; and with
affordable rent structures, and adjacent zoning priority for MRO-related work, the groundwork
can be laid for a secure place for maintenance work within an aviation and aerospace hub. This
is an opportunity for integrating, from the early planning stages, the development of a state of
the art aviation and MRO hub, bringing together specialised services and advanced solutions.
Specifically, Badgerys Creek could provide a hub for organisations supplying:
•
Heavy maintenance of aircraft in the regional RPT and GA sector;
•
Maintenance of helicopters and small jets (including regional export of maintenance
and associated maintenance training);
•
Maintenance support for aviation services, including fleet management for local and
Asia-Pacific markets);
•
Aviation-related professional services (R&D, design, approval and modification of
aircraft; maintenance management, safety auditing, weighing, and non-destructive
testing (NDT));
•
Recognised maintenance training for Asia Pacific MROs (expanding and developing the
well-equipped Padstow Aeroskills registered training organisation (RTO) facility) and
flight training providers;
•
Third party specialist overhaul services such as non-destructive de-painting and
repainting, interior refurbishment and avionics upgrades;
•
AOG services, including mobile repairs to composite structures accompanied by the
requisite NDT;
•
Defence contracting and procurement, including R&D;
•
Links with local advanced manufacturers in the supply and testing of specialised and
highly engineered components to global OEMs and Defence;
•
Tie-ins with OEMs for the provision of afterservice maintenance;
•
R&D for a post-oil aviation future and solutions to emerging requirements such as parts
recycling management;
•
Storage and dispatch of exchange parts, linking Sydney into the regional maintenance
supply networks of original equipment manufacturers.
Brisbane Airport’s success as an aviation hub in attracting maintenance and maintenance
training has already been mentioned. It is part of a Queensland government strategy based on
more extensive clusters strengths – pilot training for the Gold and Sunshine Coasts, GA around
Wide Bay and Burnett; Defence links in Rockhampton -Townsville.28 The Queensland examples
under Table A3.2 in Appendix 3 illustrate these more dispersed, mainly coastal clusters of
regional and rural MRO and aerospace activity, again indicating the importance of Defence
linkages and also showing the role of airports, GA maintenance and larger independent MRO
businesses, and both their strengths and their vulnerabilities to the turbulent regional market.
The Australasian Aviation Group – Cairns (AAG-C), mentioned in Chapter 3, began in 2006 as an
airport-based cluster, combining MROs servicing both regional airlines and GA operators, as well
28
Queensland Government, 2015; Asia-Pacific Defence Reporter (APDR), 2011.
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Innovation
as training facilities. Several of its members have approvals for offshore work in Indonesia,
Papua New Guinea (PNG) and the South Pacific, including in aircraft refurbishment.
Nevertheless, there are concerns. The endemic issue of regional aviation viability, outlined in
Section 11.3, expressed itself in 2015 when Queensland Airports sold their well-equipped Aviex
hangar in Townsville to Rex, who then closed it down within months; a contributing factor was
said to be the transfer by Virgin of its ATR fleet maintenance to Brisbane.29 These risks to the
independent and GA MRO sectors are likely to be repeated across Australia as a result of the
ongoing vicissitudes of the regional aviation sector, unless a stabilisation plan is put in place, as
part of a broader growth strategy. As already argued, the economic and social contribution of
this sector, and its longer-term growth potential, outstrip short term considerations of individual
operator profitability. The passing of the mining boom peak is likely to put further pressure on
Western, Northern and Far Northern Queensland MROs. Without a regional and rural MRO
strategy, the result is likely to be a further net loss of capability. Just as the growth of MRO
activity has been shown to provide a growth and innovation stimulus, so the closure and
underutilisation of capacity has a negative ripple effect, particularly on regional economies.30
The South Australian cluster under Table A3.3 in Appendix 3, centred on Adelaide and Parafield,
illustrates the importance of Defence contracting in capacity building, and its flow-on
encouragement of civilian MRO contracting, supported by specialist manufacturing supply
networks. The Adelaide headquarters of Cobham, BAE Systems, TAE and Australian Aerospace
also illustrate the point that clusters may have an interstate reach, rather than being
geographically concentrated. Adelaide is a site of aerospace and Defence innovation, based on
both small and medium enterprise (SME) specialist firms, and on the attraction of global
aerospace partners. There is need to consolidate local expertise, build on it and to ensure that it
is handed on intergenerationally. Adelaide Defence and civilian aerospace suppliers include
firms designing and installing sub-systems or developing new methods for testing and
fabrication. They are developing lubricants, adhesives, non-destructive paint-stripping
techniques, new approaches to strengthening materials, bonding metals and composites,
flammability testing and metrology- and 3D-printing-based precision engineering. Given the high
safety costs of component failure, it is important for security and safety reasons to ensure the
stability and growth of this manufacturing sub-contracting industry, allowing the MRO supply
chain to operate at the cutting edge of technological capability. A national aviation and
aerospace industry development strategy would look to South Australia as a component
manufacturing hub, networked into a national and international aerospace manufacturing and
maintenance supply chain.
Similarly, the Victorian examples under Table A3.4 in Appendix 3 focus on MRO and advanced
manufacturing activity, linked to the three Melbourne airports but primarily supplying an OEM
(Boeing) and nationally networked to Defence supply chains. In terms of aviation links, there is
also further unused capacity that could be brought back onstream at Avalon. The very strong
presence of Boeing, including the large Boeing Australia Component Repairs (BACR) and two
Aviall supply outlets, points to the potential for a strong Victorian contribution to the high
technology end of the international MRO industry, with OEM, R&D, Defence and advanced
manufacturing supply chain links. Victoria is the home of 12 Part 145 approved third party
MROs. As well there are several predominantly GA MROs with Part 145 approval.
29
Anderson, 2015.
30
Cole, 1989; Feloy, Field and Dickinson, 1992.
191
One of the first tasks in rebuilding national aviation/aerospace capability in Victoria, however, is
to restore the capacity for workforce development. Since Kangan Batman TAFE relinquished its
Part 147 category training authorisation, there is no public MRO training capacity in Victoria, and
we would argue that this is a matter requiring swift remedy, if Australia is to meet its own MRO
workforce development needs and put itself forward as a serious contender in helping meet the
MRO training shortfall in the Asia-Pacific region.
The Western Australian examples (under Table A3.5) reflect the changing shape of aviation and
maintenance in a resources state, but also the potential to market MRO and training services
into the Asian region. At the start of the mining boom, Qantas took over Network Aviation, a
charter/RPT subsidiary, and as the boom peaked, absorbed it into Qantaslink. Qantas and Virgin
have MRO subsidiaries in Perth – Network Turbine Solutions and Virgin Regional respectively.
Like Queensland, Western Australia has developed an export industry in flight training (China
Southern West Australian Flying College; the Jandakot branch of Singapore Flying College), and
whilst these are private ventures — the first a CAE Oxford operation, the second wholly-owned
by Singapore Airlines — they illustrate that air operators in the Asia-Pacific region are already
prepared to look to Australia for training.
This section has outlined a diversity of potential starting points for developing existing MRO
capability and building it into a self-sufficient industry, with global links and export potential: the
discussion in Section 11.1 indicates that the value of the national economic returns to doing so
will at least double the investment outlaid. It has also shown how promising initiatives,
particularly in the vulnerable regional and rural sector, need investment support in order to
consolidate and regenerate, particularly in addressing shifts such as the transition out of the
mining boom, in establishing a new export venture, or in capitalising on technological
innovation.
The value of airports as regional development hubs for technology-based industry is widely
recognised in the US, where it has achieved spectacular payoffs in a number of well-documented
cases. Australia could well duplicate some of this advantage with appropriate legislative backing.
One simple and easily enforced measure to support this kind of development would be to
ensure that laws governing additional uses of airport land give preference to uses which are
directly aviation-related, rather than allowing unused space to be sold or let to retail or other
non-aviation businesses who may simply want to evade local government rates and planning
requirements.
More generally, and by no means exhaustively, this section has provided some indication of the
different areas of strength in different Australian states and regions. A National
Aviation/Aerospace Manufacturing and Maintenance Development Strategy, supported by an
Aviation/Aerospace Innovation Fund, is required to develop and support well-worked-out
regional and export-oriented initiatives, based on potential hubs, clusters and networks such as
those which this section of the report has started to map. Such a funded Strategy is required to
building on existing initiatives and strengths, in order to generate a national, diversified MRO
and MRO training industry, capable of helping to meet the unmet demand foreshadowed for the
Australia and the Asia Pacific region.
11.8 Implementation – A new aircraft manufacturing/maintenance
industry strategy
It has been argued here that the Australian MRO industry needs to meet the challenges of the
new diversified model of maintenance, involving relationships among Air Operators, OEMs and
independent MROs, and crossing civilian and Defence. Increased cooperation is needed among
segments of industry which have so far had relatively little to do with one another, generally
serving distinct product markets, operating under different legislative provisions, in different
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Innovation
labour markets with different qualification structures and employment practices. These
commercial and regulatory silos have made it difficult for skilled labour to move across the
different aviation and aerospace sectors, broadening and deepening expertise in order to take
part in innovation.
A way of bringing together these sectors and markets is by building on emerging hubs, clusters
and supply chain networks, drawing in under-utilised infrastructure and creating new capacity.
As well, expansion of the MRO industry to meet emerging opportunities in the Asia-Pacific
region will need to be underpinned by the swift implementation of a workforce development
strategy. It is important to ensure that skills are not lost to the industry in the process of
company restructures, and above all, it will be essential to reverse the recent decline in the
nation’s capacity to provide broad-based training effort.
The final chapter outlines unresolved issues that will need to be considered as part of the
agenda of such an industry and workforce development strategy, taking account of the strengths
and needs of each aviation sector, and the potential offered by its interface with the aerospace
industry. It will outline the role of:
•
A National Aviation/Aerospace Industry and Workforce Development Strategy, bringing
together each aviation sector and aerospace supply network, both civilian and Defence,
to identify the measures required to turn around our national MRO industry and ensure
that it contributes optimally to regional development, economic prosperity, defence
security and technological innovation
•
An Aircraft Manufacturing/Maintenance Industry Forum to provide information and
advice on the development and implementation of the strategy, interfacing with the
new Industry Reference Committee and Skills Service Organisation structures currently
in the process of being established, in the monitoring of emerging workforce
development needs, and skills planning, for new intakes, skill upgrades, career
transitions and maintenance education exports
•
The establishment of a regionally networked, cross-sectoral National
Aviation/Aerospace College, for the purposes of high quality workforce development,
broad-based exchange of knowledge and innovation capacity across both aviation and
aerospace, and export of high quality education and training.
193
RECOMMENDATIONS
•
RECOMMENDATION 4: That Federal and State/Territory Governments adopt the
recommendation of the 2014 NSW Parliament Legislative Council Inquiry into
Regional Aviation Services, that regular passenger transport services in regional
Australia be seen as an essential service, and that a dedicated grant/loan fund be
established to assist local government authorities to support the consolidation of
MRO services.
•
RECOMMENDATION 5: That the Aircraft Manufacturing/Maintenance Industry
Advisory Forum (see Recommendations 1-2, Chapter 12) and those developing
Airport Master Plans, including those working on the Badgerys Creek Second Sydney
Airport, include plans for precincts that will attract clusters of MROs, maintenance
training providers and OEMs, networked to aerospace manufacturing and
engineering providers.
This will facilitate the role of airports as hubs linking air operators, MROs, R&D,
advanced manufacturing and the export of maintenance training. Overseas
evidence suggests that multiplier and catalytic effects on local economies repay
government developmental support several times over in revenue returns.
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Chapter 12 - Conclusion: Findings, General Recommendations and Priorities
Chapter 12 Conclusion: Findings, General
Recommendations and Priorities
12.1 Introduction
The last decade has been a period of crisis for the Australian aircraft maintenance industry. This
project was commenced to consider options for addressing this crisis. Several factors mean that
aircraft maintenance is different from some other areas of Australian manufacturing, in that it is
simply not possible to offshore the maintenance of large portions of the Australian fleet. Nor is it
possible to do without the latter’s vital contribution to many aspects of life in a large, remote,
sparsely-populated continent. Australia will always require the capacity to work on most of its
own aircraft.
Periods of crisis are also periods of opportunity, and this one is no different. The looming global
shortfall of trained and licensed personnel is also an opportunity to develop an export industry
in maintenance training services, as well as to take on a more prominent role in the global
maintenance repair organisation (MRO) industry itself. Shortages of skilled and licensed
personnel to some extent derive from the explosive growth in the industry as a whole. Global
third-party MRO has grown into a $AU 67.1 billion industry. Its cumulative annual growth rate
(CAGR) is expected to average 4.1% over next ten years, taking it past $AU 100 billion around
2024.
Among the major regions, Asia-Pacific is predicted to show the highest annual growth rate in
MRO activity at 5.6%. 1 International authorities have been warning for some years that the
region as a whole suffers a serious deficit of MRO capacity (especially skilled workers), which is
only likely to worsen as the growth of its fleet outstrips the growth in resourcing. As argued in
Chapter 10, the International Civil Aviation Organisation (ICAO) estimated in 2010 that the AsiaPacific region as a whole employed only 14% of the world’s technicians, whereas based on the
same estimates, we have calculated that Oceania alone had some 4%. By 2034, Boeing forecasts
that the region will need to increase its numbers to 40% of the world technician population.
Based on the same ICAO projections, the capacity of the world training system in each of the
twenty out years was expected to fall at least 25% below the annual growth in labour
requirements, while in the Asia-Pacific region, achievable output was running at only a third of
the required level. This implies an annual shortfall of over 18,000 qualified new maintenance
workers, 80% of them concentrated in the Asia-Pacific region.
Even allowing for the fact that several Asian countries have made serious efforts since 2010 to
build up their maintenance training capacity, it becomes clear that Australia’s experienced and
mostly well-trained MRO workforce is becoming a significant asset not just for Australia but for
the entire region. This asset will only increase in value as supply problems escalate across the
world industry. The growth in demand across the region represents an opportunity to put to
productive use the many skilled aircraft maintenance engineers (AMEs) who have suffered
interrupted careers in the current period of intense restructuring. Conversely, the greatest
threat to Australia’s chances of realising its potential in the emerging world market lies in the
possible loss of much of that base of expertise if its most skilled members continue to leave the
industry against their will, or if the recruitment of new skilled workers continues to stall.
1
CAVOK, 2015
195
Provided the Australian maintenance industry, and the training sector in particular, can respond
in time, the Asia-Pacific region has the potential to become an important source of demand for
Australian expertise and input, representing a basis for Australian providers to exploit
economies of scale which were not previously achievable within the domestic market.
One of Australia’s biggest potential assets in terms of aircraft maintenance is its large,
unexpectedly diverse resource of small and medium MRO firms, some of them linked into the
advanced manufacturing sector, and into the supply chains of the global major aviation firms.
But that potential has so far been limited by geographic dispersion, poor communication,
inadequate scale and above all the absence of the necessary coordination, despite the serious
efforts made by several State governments to provide such coordination over the last decade.
Australia at the national level needs to marshal these resources into an industry strong enough
to serve its domestic needs, as well as into a competitive weapon – a task that is far from
beyond its capability, provided the political will can be mustered.
Yet there have been, and still are, serious indicators that Australia’s capacity to carry out this
coordination and consolidation of capability is in decline. These indicators include the highly
visible loss of jobs in the heavy maintenance sector despite a looming skills shortage of global
proportion. In the absence of concerted action to nurture and build Australia’s aircraft
maintenance industry and the training system on which it depends, the cost will be not only the
loss of export revenue and employment opportunities, but the exposure of aircrew and
passengers in Australia’s planes to unacceptable levels of danger.
This concluding chapter draws together the main evidence for this assessment, before outlining
a set of proposals for an approach to consolidating, coordinating and building maintenance
capacity in order to contribute to four goals — regional development, economic growth based
on self-sufficiency and exports, defence capability and innovation.
12.2 The long transformation: maintenance industry diversification
At the beginning of this project, it appeared as though Australia was witnessing the terminal
decline of the domestic heavy maintenance capacity of its regular public transport (RPT) fleet.
Qantas was publicly shedding large numbers of maintenance jobs and Australia’s largest
independent civilian maintenance facility for large aircraft, the John Holland Aviation Services
(JHAS) workshop at Avalon, eventually closed down. Work on the B747s, previously expected to
continue being undertaken in Australia until the type was retired, was moved offshore. The
number of Australians in training for aircraft maintenance qualifications turned down sharply
from around 2013 onwards, and reputable estimates of the loss of employment in the
occupation ranged as high as 45% in five years, with total employment predicted to continue in
decline at least until 2017.2
None of these indications is misleading in its own right. However, to focus on them too
exclusively is to ignore the steady rise of innovation in MRO and the growth of a new related
industry sector, in Australia and globally, more or less under the radar of public debate on the
maintenance of the major passenger fleet. What we are seeing in effect is a transition to a
greater diversity of MRO industry structures. The original model, at least in the airline sector
(although not in General Aviation (GA)) was one in which maintenance was done primarily in situ
on the plane, on the operator’s premises, by a group of workers with specific high-level skills in
aircraft maintenance who were employed by the operator, and where invasive checks were
2
Department of Education, Employment and Workplace Relations (DEEWR), 2012c
196
needed at scheduled intervals to detect latent structural and mechanical faults before they led
to disastrous consequences.
The emerging model is one in which much maintenance work will be distributed among contract
MROs and light manufacturers in complex supply chains, potentially under a variety of
employment arrangements. A greater amount will likely take place remotely from the hangar
through the replacement, repair and remanufacturing of large component assemblies; equally,
some will be brought back on site and performed, for example, by specialist maintenance staff
also potentially under diverse employment arrangements (e.g. on-wing engine maintenance).
Some airlines such as Lufthansa have opted to contract in maintenance from other airlines as a
profitable business sideline. An increasingly large share of the work will be controlled directly or
through subcontracting by original equipment manufacturers (OEMs) in the context of a
distributed global industry. Many of the traditional checks will have been replaced by
sophisticated diagnostic equipment and self-monitoring capabilities built into the aircraft, and
the length of time between D-checks is expected to increase significantly. The outcome of these
new arrangements, driven by a mix of technological change, economic restructuring and
regulatory change, is difficult to predict.
This change is also generational in the sense that it is unlikely to occur overnight. Parts of it had
already begun before the turn of the century, much of it will be incremental rather than a steepchange, and will take at least another 15-20 years before it is complete. Even now, around half
the world’s heavy maintenance (the first segment of MRO to show a significant impact of
changing practices on industry structure and the labour market) is still being done on the air
operator’s premises, and the figure is almost certainly much higher in Australia. So far the OEMs
have achieved limited penetration of that maintenance market, and cannot be expected to do so
until composite airframes make up a much larger segment of the fleet. The coming generation of
high-efficiency jet engines is only now beginning to come off the production line, and the
collapse of jet fuel prices over the last few years can only have reduced the short-term incentive
for operators, either to buy new types built around them, or to repower their existing aircraft.
The pace of change in technology across the Australian fleet is difficult to predict accurately; this
is one reason we have chosen to restrict our labour demand projections to ten years out,
whereas the ICAO, the International Air Transport Association (IATA) and Boeing, with more
insider knowledge and data at their disposal, all use a 20-year timeframe. However, based on
the current age profile of the Australian main-route passenger fleet and known orders for new
airframes, it seems reasonable to predict that the broad pattern of technology requiring
maintenance in ten years’ time will not be that much different from the way it looks today.
Certainly we would expect by then to see a higher penetration of new-generation aircraft,
notably the B787 and A350, along with the B737MAX and A320/321NEO (more suited than the
former to the needs of domestic carriers), which will use new-generation engines in largely
current-generation airframes. The oldest and most labour-intensive types will have been retired:
all the B767s are already retired from Australian service, except for one reportedly destined for
conversion to a freighter; there is no indication that any of the 747s will be replaced by the
newer -8 series, and the B717 (a long-standing design although the examples in service in
Australia today were built in or after 1999) will surely by then have been displaced from its
present routes either by one of the new-technology regional jets now coming on to the market,
or by one of the smaller current single-aisles. With these limited exceptions, the commercial
passenger fleet in use on the main inter-capital routes is likely to remain dominated by aircraft
of the generation currently in production, on which even the younger members of today’s AME
workforce have been trained, and which will continue to rely for their safe operation on the
skills held by the current generation of airline engineers.
This outcome seems even more likely for the regional fleet, as the large number of new regional
turboprops acquired over the last 5-10 years means that these designs (which typically have a
197
longer lifespan in service than jets) should remain in use well into the late 2020s if not longer,
while the “tail” of older small twin turbofans (F80s and the like), many of which were imported
for fly-in fly-out (FIFO) use during the investment phase of the mining boom, can be expected to
gradually find their way out of Australian service now that this phase is over. If anything, the
impact in the medium term may be more noticeable in GA, where the fleet is currently made up
overwhelmingly of designs first developed many decades ago, even if some of them were
manufactured in recent years and many of the old ones now do very little flying. Yet most of the
types first developed in the last decade or so use quite modern technology such as all-composite
hulls, glass cockpits, and advanced engine designs including the latest generation of lightweight
aeronautical diesels, in the interests of more economical operation. The more intensively such
smaller planes are used, the more likely it is that their lower operating costs will outweigh the
higher cost of buying new. This suggests that the proportion of total GA hours flown by this new
generation of light aircraft (and hence its share of the maintenance load) will grow much faster
than their proportional representation on the Civil Aviation Safety Agency (CASA) Register.
All this indicates, emphatically, that a reduction in the size of the Australian MRO workforce
would not be an appropriate response to this changing environment. While there may well be
an incremental reduction over the next 10-15 years in the average maintenance load relative to
the size of the fleet in service, this is likely to be offset if not outweighed by the expected growth
of the fleet.3 Just as importantly, the overall safety of Australian aviation will continue to depend
on present-generation maintenance skills well beyond any realistic planning horizon, with the
global skill shortage leaving Australia steadily more reliant on its own resources.
It follows that the workforce as a whole will increasingly need to exercise a spread of skills
spanning the requirements of several generations of technology, from the traditional mechanic’s
hand skills through to the use of highly advanced electronic diagnosis equipment, including
remote access to such technology while a plane is actually in the air. While it can be expected at
least in the short term that different workshops will specialise in different generations of
technology, the steady interpenetration of newer designs into the existing fleet, together with
the geographic dispersion of Australia’s maintenance facilities and activity, will make it more
important over time for the average Australian AME – even or especially in GA – to become
more diversely skilled and develop the flexibility to move across different segments of work as
the fleet and the industry evolve. Equally, as the boundaries between MRO and the related
cluster of industry sectors are reshuffled, it will be necessary to equip both the present and the
future workforce with a skill base and a qualifications and licensing structure that enable them
to move between what have hitherto been separate labour markets as the pattern of activity
and demand shifts. Both these requirements will pose new challenges for a training sector which
currently struggles to cope even with the traditional requirements of the MRO labour market.
Treating the process in these terms – not as a decline, not as a resurgence, but as a transition
taking place over several decades – makes it easier to link the different themes which have
emerged over the course of this project. Most of the developments which have raised concern
have either originated or been rationalised as responses to the emerging transition; or to put it
differently, most of the problems have been the results of poor handling of that transition:
•
3
The shift to the European Aviation Safety Agency (EASA) licensing scheme, widely
contested in its initial stages, is now seen in many quarters as an essentially rational
response to the increasing globalisation of the MRO labour market; its failings to date
This was explicitly recognised by Boeing in its 2014 Pilot and Technician Outlook. See Boeing, 2014.
198
have stemmed from inadequate or inappropriate mechanisms to shift from one system
to the other while still retaining the full productivity of the workforce.
•
The associated rise in the base qualification from Certificate IV to Diploma is an
acknowledgement of the inevitable professionalisation of the occupation and the
gradual shift in the balance of activity from mechanical to theory-based diagnostic skills;
but that process of adjustment has been blocked by the failure of the funding system to
keep pace, and counteracted by loopholes in the licensing regulatory framework that
potentially open the way for critical certifying functions to be carried out by employees
less qualified than most of those who currently certify for work on aircraft in Australia.
•
Though the optimum ratio of workers to fleet size will most likely continue to fall over
the longer term, the job-shedding that has taken place over recent years has occurred
well in advance of the fleet modernisation which was its ostensible justification. It
assumes away some important issues which only future experience can resolve (notably
what teething problems are likely to show up with the new-generation engines, and
what vulnerabilities might emerge in composite hulls after several years of airline
service far more intensive than anything previously experienced by their predecessors in
military applications), and has pre-empted some future options for adjustment by
depleting the skilled workforce while at the same time crippling the capacity of the
training system to restore its numbers when they are needed again.
•
Similarly, the increasingly relaxed attitude towards safety precautions which has been in
evidence over recent years, though it has been justified in part by the growing adoption
of ostensibly failsafe technologies, has arguably run ahead of both the effectiveness and
the ubiquity of those currently in service.
•
Periods of transition invariably mean higher aggregate costs than periods of stability,
whether in technology or in institutions, because of the need to keep an old and a new
system running side by side. Unfortunately, the start of this period of transition in the
global aviation industry coincided with a period of strong competitive pressures, driven
largely by a combination of unprecedentedly high fuel costs and unprecedentedly low
barriers to entry into the world passenger market. These pressures almost invariably
resolved themselves in short-term cost minimisation, resulting in a temptation to seek
the premature harvesting of savings which are still only potential. The imperative to cut
costs should in theory be reduced now that the world’s airlines have practically all
returned to very healthy levels of profit,4 but in practice the competitive strategies
adopted in the period of shared financial stress may not be as easy to reverse.
All these adjustment problems can be overcome, provided they are individually acknowledged
and collectively approached in a coordinated manner. The recommendations which follow are
put forward as a strategy for unblocking the transition and opening the way for the resurgence
in business and in employment which it promises. Meanwhile we must return first to the
problems created by inadequate policy responses to the emerging transformation.
We begin with the emerging global skills crisis, which casts a shadow over the whole aviation
industry. As Chapter 10 argued, information from authoritative international sources — IATA,
ICAO, Boeing, CAVOK — has established that the aviation world is heading into a crisis of global
4
Financial data released in September 2015 by the Department of Transportation show a combined
reported net income for US airlines of $5.5 billion for the June quarter, a 53% increase over the same
period last year. Qantas also reported a spectacular return to profit in its 2014-15 results, barely a year
after it had been seeking government assistance.
199
proportions in the supply of skilled and licensed personnel. The biggest shortfalls are expected
to arise in precisely those parts of the world (Southeast Asia) to which Australian carriers are
increasingly turning to meet their maintenance requirements. Indeed, this is already happening.
Shortages of skilled labour in these regions will necessarily affect both their capacity to take in
work from countries like Australia, and the quality of that work. They will affect the prices they
will be able to charge in what will progressively become a seller’s market. In the medium term,
this is bound to mean a compression of the cost differential between performing maintenance in
Australia and outsourcing it; eventually it could undermine much of the economic case for
offshoring Australian work. It could also force Australian airlines to offshore work to second-tier
MRO suppliers of dubious quality. Australia will face a genuine threat to the safety of the planes
which it offshores unless it is able to rebuild sufficient capacity to handle at least a reasonable
proportion of the work which has been lost overseas.
This report has described the growth in third party MRO services, associated with the first wave
of outsourcing and offshoring, initially to regions characterised by cheap labour and lax
regulation. We do not make sweeping claims that offshored maintenance is universally or even
predominantly unsafe. However, the research has found some evidence of some unsafe
procedures in some offshore MROs to which Australian carriers have offshored maintenance.
One of the major themes of the report has been safety and safety oversight and regulation, to
which we now turn.
12.3 Offshoring and safety
There is no doubt that statistically, main-route passenger aviation today is by far the safest of all
modes of travel, and it is slowly becoming even safer. But the low probability of having an
accident has to be balanced by the high impact of those accidents which still occur. It is also
salutary to note that some of the most costly accidents in postwar civil aviation have been
directly traceable to maintenance. The most authoritative literature indicates that around 10%
of accidents are attributable to maintenance. Yet the number and rate of accidents is too small
to support any statistical association between the frequency of accidents and the location where
maintenance is carried out, or even to outsourcing per se. Our sources mainly examined
accidents and incident rates of large RPT planes, but the accident rates for General Aviation are
3-4 times higher than for RPT – and they are actually increasing.
Safety generally exists as part of a tradeoff between the extent and number of defences against
a disastrous outcome, and the costs of those defences. As one of the most cited gurus of safety,
James Reason, puts it, safety exists in a tension between protection and economic efficiency (the
latter interpreted in terms of short term profits). While there is ample literature linking adverse
occupational safety and health outcomes to outsourcing and offshoring, relatively little has been
written on the links between offshoring and aviation safety. This project has explored these links
in the case of the United States (US), where several aviation accidents have been directly linked
to outsourcing and offshoring of maintenance. It has identified known risk factors that are
associated with poor safety outcomes in occupational health and safety (OHS), and explored the
possibility that these may affect the safety of maintenance. Outsourcing and offshoring have
been shown in the OHS literature to increase vulnerability due to pressure of various sorts,
including financial pressure; disorganisation, including communication failures; and, in
particular, regulatory failure. These can increase error rates through work intensification and
high working hours; and the use of unqualified and inadequately trained workers, and the
potential entry to the supply chain of unapproved parts.
The act of outsourcing itself creates a number of agency problems, endemic to contractual and
time-bound and time-pressured arrangements. The interests of the agent (the third party MRO
service provider) and of the principal (the airline) do not always neatly coincide, and this can
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cause under- or over-servicing. While the former is a more serious problem, the latter is not
without economic effect.
In response to concerns about the safety of offshored maintenance, political pressure in the US
has obliged the Federal Aviation Administration (FAA) to intensify safety oversight of offshored
facilities.
In the light of similar safety concerns raised in Australia (detailed in Chapter 6), a particularly
important area of policy focus needs to be the regulatory oversight mechanisms for offshore
maintenance (Chapter 7). Here, in 2015, there appears to be a case of regulatory failure. CASA is
responsible for the safety oversight of offshored maintenance. Yet the legislative and other
instruments that govern CASA also may allow it in effect to devolve this responsibility
“offshore”, for reasons explained in the next paragraph. This apparent transfer of regulatory
responsibility is occurring at the same time as a shift in the process of safety inspection – from
monitoring of actual practice to auditing of the documentation of process – a trend already
noted with concern by IATA in its 2013 Safety Report, which observed that MRO certification is
not a guarantee of work quality.
ICAO regulation is somewhat at cross purposes, producing a regulatory tangle such that it may
not be entirely clear who bears the responsibility for regulatory oversight of offshored
maintenance. Article 31 and Annex 8 affirm that the safety oversight of offshored maintenance
is the responsibility of the state of registry. Yet Article 33 allows, or arguably even requires, that
each country accept the regulatory arrangements of another country – provided they meet or
exceed ICAO minimum standards. Chapter 7 describes how the bedrock of the ICAO safety
system, the Universal Safety Oversight Audit Program (USOAP), which assured signatory states
of a degree of compliance with ICAO standards and recommended procedures (SARPs), is now
no longer in use, and its putative replacement (a “continuous monitoring approach”) lacks
visibility. The research as a result is unable to express confidence in the international system of
safety oversight based on the 1944 Chicago Convention. The emerging paper-based approach to
risk management calls into question the current trend to cede the safety oversight of Australian
registered planes to the national aviation authorities of other countries, including via bilateral
aviation safety agreements (BASAs) and “technical agreements”. CASA’s acceptance of it
appears to be at odds with the intensification of regulatory oversight of FAA registered planes
offshored for maintenance from the US.
This report therefore recommends an intensification of regulatory oversight of maintenance
offshored from Australia. In order to follow the lead of FAA in stepping up this oversight, two
obstacles need to be addressed and worked through. The first of these – the principle of
national sovereignty – prevents unannounced inspections, and otherwise limits the scope of
retaliatory action against non-compliant MROs. So it will be instructive to identify how the FAA
has addressed this question, and to explore ways of aligning Australia to the FAA approach. The
second concerns the capacity of CASA to engage in the sort of inspection required by the shift
from shopfloor inspections to auditing of safety management systems (SMS). Two major
inquiries – the ICAO USOAP itself, and the more recent Aviation Safety Regulation Review
(ASRR), have cast doubt on the capacities of Australia’s civil aviation safety inspectorate to fulfil
this role.
For it to do so would require a significant infusion of resources, in the form of increased
numbers of inspectors, and greater training activity – something this report recommends. This
report also recommends that the increased intensity of inspection of overseas facilities be
funded, in large measure, by cost recovery from offshoring air operators. This would act as an
incentive to bring some offshored maintenance back to Australia.
One aspect of the concern about practices in overseas MROs is a need for quality assurance
regarding systems of aircraft maintenance licensing and training. As the next section argues,
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there are concerns about aspects of the training and certification system in Australia also and
these concerns point to the need for a wider study of the question of the skills and licensing, and
the certification practices, employed in the MROs in the countries to which Australia offshores.
Confidence in these capacities and practices is supposed to flow from the international system
of safety oversight, based in the ICAO regulations, for which a mutual exchange of approvals
appears to be a weak substitute.
One approach to MRO quality assurance would be for Australia to initiate and participate in an
Asia-Pacific intergovernmental project to establish best practice standards for training,
certification and licensing, across aviation sectors, in response to technological change in the
region. Manufacturing Skills Australia, when engaged by the Australian Government to do so,
has already successfully taken a major role in some Asian intergovernmental/industry-level work
on comparable engineering/manufacturing skills standards and specification of training needs.
We strongly advocate that this international collaborative role continue to be pursued by the
new Industry Reference Committee and Skills Service Organisation structures currently in the
process of being established.
In the context of the emerging overall skill shortage in the region identified in Chapter 10, and
the multiplier benefits identified in Chapter 11, government and airport support is needed to
assist air operators, MROs and OEMs in repatriating maintenance work and in making Australia a
training hub for the Asia-Pacific region. The development of a strategy for enhanced assurance
of compliance with national and offshore safety standards, across the airline and GA sectors, will
be an important brief of the Aircraft Maintenance/Manufacturing Industry Forum,
recommended in Chapter 11.
12.4 Licensing and reform of the suite of maintenance regulations
We now turn to the issue of licensing reform, discussed in chapter 8. In 2007 CASA began
implementing the new suite of maintenance regulations, based on the European Aviation Safety
Agency (EASA) system. New licences were issued in July 2011. The new licensing system
(regulated under CASR part 66) had two broad categories. Licence Category B1 subsumed the
former airframe, engine and some electrical categories, and the B2 subsumed the former
electrical, instrument and radio categories. Significantly there were two new categories of
release-to-service licensed engineers – Category C released planes to service following base
maintenance, while, controversially, a new Category A licence holder, qualified at Certificate II
level, could perform limited tasks in line maintenance, and release a plane to service. Inevitably,
there were transition problems, in that many licence holders, initially at least, were unclear
about what they could sign for, because of the new, more complex licences.
The importance of licensing, under ICAO Annex One is clear – to certify for the safety of stages of
maintenance, as well as to release the plane to service following maintenance. While Annex One
does not exclusively mandate a state-based licence system, it does make the important
specification that “certifying employees” who operate under a different institutional
arrangement must hold qualifications and experience equivalent to those required of a licence
holder. Australia has opted for a state-based licensing system – although, interestingly, when the
new licences were issued in July 2011, they did not contain reference to Annex One (an
oversight subsequently corrected). Also importantly, the LAME’s privileges are cross-cut by
obligations to their employer, and there is endemic tension between these pressures.
Interestingly, in a potentially crucial industrial relations determination in 2012, known as the
Sunstate Case, the Federal Court found that employers’ prerogative overrode the licensed
aircraft maintenance engineers’ (LAMEs’) obligations, under Civil Aviation Safety Regulations
(CASRs), to report a defect when one was detected. This may have portentous implications for
the balance between safety and efficiency, when the key part of the LAME’s role is to safeguard
the former.
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The CASA Regulatory Reform Program lends itself to the erosion of the control that LAMEs have
over certification work, with potentially serious implications for safety. Certification work can
potentially “leak” to people not qualified or licensed to perform it, due to the deployment of
ambiguous terms like “certifying employee”, which can refer to a licence holder performing
certification work, or a non-licence holder doing the same work or similar. MRO employers have
powers of “approval” over who performs “certification work”. There are clear regulations, based
in the Chicago Convention, detailing the importance of the licence and defining the scope of the
work, to which Australia is committed by international treaty and its own legislation giving effect
to that ratification, and it is of crucial safety importance to safeguard against any departure from
these strictures.
There has been much concern about the Category A licence. In the CASRs, this is able to be
achieved after (depending on the precise type) 620-800 hours of training, and the attainment of
a Certificate II qualification. This reduction in training and qualification requirements speaks to
the expressed desires of certain employers for a sub-trade qualification and licence. Such a
qualification, however, has never been seen in Australia before, and indeed the leading
European countries have not embraced such a licence, with “return to service” privileges
attainable after such a low level of training. Rather, in leading European countries the Category
A licence is either not used at all (as in Sweden), or is attainable after a 3 year apprenticeship (as
in the United Kingdom (UK) and Germany). It is important to explore whether the Category A
licence at Certificate II level is in fact compliant with ICAO Annex One. This is an issue that needs
to be addressed by the proposed Aircraft Maintenance/Manufacturing Industry Forum.
The EASA regulations disguise tensions between proponents of a national licensing scheme, and
a “company approval” scheme, which would give broad approval powers to employers. The
precise ways in which this tension plays out in other countries remain a subject for further
research, but in Australia the ambiguity of such terms as “certifying staff” introduced an element
of uncertainty about the level of certification necessary for certain tasks. This is why this Report
supports the ASRR’s recommendation that the CASR 1998 regulations be re-written in a plainlanguage “third tier”. The very act of doing so would force to the surface the dangerous lack of
clarity in the regulations.
Apart from issues of the scope of certification work, there are a number of issues at the
interface between the licensing system and the training system, discussed in Chapter 9. First,
and most importantly, the base qualification required for a B licence is now a Diploma, whereas
many existing LAMEs are likely to have qualifications to Certificate IV plus the CASA Basics. 5 But
State governments have almost uniformly refused to fund the 1,000 hours difference between
the Certificate IV and the Diploma, leaving this significant cost to the individual. Second, at a
stroke, many of these licence holders faced “exclusions” – their licences were deemed “partial”,
and this had career consequences. These included that the licences were no longer recognised
overseas, even in Europe, and that to gain full B level licences, they had to undergo further
training and/or assessment – again at their own cost.
Third, EASA B licences apply to the large planes (above a threshold of 5700 kg maximum takeoff
weight (MTOW)) in the (RPT sector, which means a separate licence is needed for the small
plane GA sector. This change breaks from a defining feature of the former CAR31 licensing
system – that a person could move smoothly from group licences to type rated through
5
Under the “old” licensing system, LAMEs were allowed to rely on the may have been the CASA Basics
plus their Schedule of Experience (SOE) and type training. While trade training was not mandatory, in the
airline/large aircraft sector, the Certificate IV was also required, this was not always the case in GA.
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specialised self-study and the accumulation of experience. Defining the structure of this licence
has been a persistent problem, including for EASA itself.
Australian authorities have set the underlying qualification level for any aircraft maintenance
work at Certificates III and IV. This makes some sense for GA, in that while much of the GA fleet
is technically unsophisticated and capable of being covered by the old CAR31 “group” system, an
increasing number of small planes are built to new designs, as explained earlier, and have, or
have been retrofitted with, sophisticated technology, requiring high level theoretical knowledge,
diagnostic skills and therefore specialised training for which a type rating is appropriate. Perhaps
more importantly, the currently proposed Certificate III/IV in Mechatronics (as it is called),
designed to underpin the proposed small plane license, cannot easily act as a stepping stone to
the Diploma – undermining the possibility of career beginning in GA and moving to RPT. 6
At time of writing the licence structures and qualifications for the small plane sector are
unresolved. It is essential that they be so resolved, and that the process of its resolution pay
attention to how (and when) the same issue is resolved in Europe, as well as China – potentially
a large market for training, given that its GA sector is about to be opened up to greater
participation.
State government funding of the costs of meeting the training gap between the Certificate IV
and Diploma is an issue for immediate resolution by the Commonwealth Government or the
Council of Australian Governments (COAG). The issue of licensing career paths between sectors,
both GA and airline, and Defence/civilian aviation, is an important agenda item for the Aircraft
Maintenance/Manufacturing Industry Forum.
12.5 Training
We turn now to the training issues, discussed in Chapter 9, and supplemented from a different
perspective in Section 10. This material has documented a serious decline in Australian aircraft
maintenance training, in terms both of quantity and of quality. As regards quantity, the numbers
in training in 2013-14 are the lowest since statistics have been available. As mentioned, State
governments almost uniformly have refused to fund the additional cost of studying for a
Diploma, meaning that 97.6% of the (relatively few) apprentices still in training are studying only
for a Certificate IV. State governments have also (mostly) refused to fund the cost of training and
assessment for exclusion removal. Partly as a result, in the four years to September 2014, only
90 apprentices commenced study for a Diploma (83 of them in the year to September 2012),
and of these only 39 had completed the qualification, with another 37 still in training. More
alarmingly, there had been no new commencements at this level since June the previous year,
and 30 had withdrawn or cancelled in the June quarter 2014 alone.7 This indicates that the
attempt to upgrade the qualifications of Australia’s licence holders to diploma level has to date
not succeeded — a situation that needs to be addressed forthwith, if Australia is to achieve its
potential as a thriving maintenance hub.
This study found a widespread perception that the quality of training has declined. Our interview
database contains many accounts of graduates with poor skills, particularly hand skills. As we
write, the Australian training system is coming under increasing criticism over its ability to issue
6
Opportunity for progression from the proposed B1/B2 (Small Aircraft Licences) to the “full” B1/B2 levels
for RPT is envisaged to be supported via skill sets that provide training pathways within the MEA training
package (skill sets). Similarly, skill sets are under development to allow SAL holders to work on more
advanced technologies emerging in certain small aircraft.
7
Revised figures supplied by Manufacturing Skills Australia (MSA), email, October 2015.
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valid qualifications, and over a decline in assessment standards. Yet at the same time as the
training system is under investigation by the vocational education and training (VET) reform
taskforce, CASA’s Regulatory Review Program (RRP) has turned over to it the responsibility to
develop and assess the skills of Australian AMEs, licensed as well as unlicensed. As CASA has put
it, under Part 147, the competency-based system “replaces the knowledge tests and experience
schedule”. If Australia is to play a leading role in contributing to high standard maintenance
capability in the Asia-Pacific region, it needs to attend to quality issues relating to training, and
again the opening up of a conversation on this question could be a role for the Aircraft
Maintenance/Manufacturing Industry Forum.
The system in place to December 2015 assigns to Skills Councils the responsibility of developing
competency standards, qualifications, and training packages, but allows them at most the right
to provide some limited support documents to assist in the design of training programs, their
delivery, and above all their assessment in a training market.8 Industry Skills Councils may take
the initiative in issuing guidance to training providers about the interpretation of the Standards
and training packages, but there is limited capacity to ensure that such guidance is followed.9
This arguably opens the way to quality gaps and is significant weakness of institutional design,
cutting across the training process, and moving Australian maintenance training out of
alignment with emerging international training practices.
It might be thought that the CASR Part 147 approval process and subsequent auditing of
maintenance training organisation (MTOs) would mitigate any tendencies towards poor quality.
Yet there is a loophole in this system, since several more registered training organisation (RTOs),
within the training system but not approved as MTOs by CASA, are permitted to deliver, assess
and accredit aircraft maintenance training to the level of Certificate IV. Only RTOs approved by
CASA as Part 147 MTOs are allowed to deliver category training — that is, training that counts
towards a licence. Yet the principle of mutual recognition (a measure designed to require RTOs
to accept each other’s qualifications) makes it obligatory to recognise certificates of attainment
issued by any other RTO, and this also applies to those RTOs that are not approved by CASA as
Part 147 MTOs. It allows competencies passed at a lower standard (e.g. for Certificate IV
training) to count towards the Diploma. According to the Part 66 Manual of Standards (MOS),
the pass mark for category modules must be 75% – yet mutual recognition requires that
RTOs/MTOs grant prior standing to certificates of attainment from non Part 147 organisations –
which can have a pass mark of 50%. The result is that training done outside the CASA-regulated
system can indeed count towards a licence, making the rationale for specifying that category
training take place only in Part 147 organisations somewhat redundant. This is a tension or
contradiction between CASA and Australian Skills Quality Authority (ASQA) regulations.
This research has also examined debates over more fundamental aspects of the Australian
training system, including the use of competency based training (CBT) methodology. CBT as the
8
As an example of guidance materials under development, see Manufacturing Skills Australia (MSA)
(2015c).
9
Australian Skills Quality Authority (ASQA), 2014. This citation refers to a 2013 report by PwC, as part of a
review of ASQA processes, which found that neither Industry Skills Councils not ASQA nor the nowdefunct National Skills Council that endorsed Training Packages had responsibility for providing guidance
on standards and training packages. Whether the self-regulation of even high quality MTOs is advisable in
a safety-critical industry is a moot point. Trainers working for providers are likely to have limited purchase
in arguing for resources, that are not mandated but may be integral to the rigour of teaching and
assessment: “There will be many examples that experienced maintainers could identify and their use
depends on the training organisation being able to muster the manuals and data sources required for the
scenarios” (Correspondence from Training Package developer, October 2015.)
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central “language of capability” has been somewhat controversial in the Australian Training
System. Part of the reason is people talking past each other, meaning different things by the
term. Critics argue that CBT is not effective for specifying high-level theory or the skills and
knowledge levels such as those for the B licence that have moved beyond “trades” knowledge
and have entered the realms of paraprofessional and technician level understanding and its
application; supporters point to standards that do cover require complex decision-making, based
on theoretical understanding. Chapter 9 documented how competency standards, while they
can fairly be said to cover theoretical content, by their very nature do not specify it in sufficient
detail to be informative for educators. At present, despite recent efforts, there is arguably still
insufficient guidance being provided to educators, who decide what theoretical content a
trainee needs to meet the requirements of the EASA syllabus.
It may be argued that it is reasonable, within a CBT framework, to expect that those developing
theory modules will have the rigour required to cover the knowledge and to use it to build the
competency required to understand complex elements, and meet demanding performance
criteria under a range of conditions. But in a safety-critical industry, this is another case of the
need to balance trust and proof. It is difficult to achieve the common standard of knowledge set
out in the CASA syllabus when a number of RTO/CASA MTO organisations deliver training.
Further guidance and oversight are required to ensure a common level of content that both
satisfies the CASA syllabus requirement (Part 66 MOS) and has been developed at local level
through training needs analysis. This is even assuming that all training providers have the
commitment, curriculum design expertise, resources and training hours needed, in order to
develop and assess the required theoretical knowledge and the capacity to apply it.
In the international sphere, aviation training appears to be in the midst of considerable reform,
in particular through ICAO’s Next Generation of Aviation Professionals (NGAP) program. The
ICAO Training Manual has been the basis for international standards around training, and it
contains – specified in detail – knowledge, skill and experience requirements, complete with
levels of proficiency and numbers of training hours deemed necessary to attain them. In our
assessment, admittedly limited by problems of comparison, Australian training is falling short of
the requirements specified in the ICAO training manual, in respect of funded hours allocated to
certain modules in the diploma.
Thus, returning to Chapter 10, the report finds little reason for optimism that the challenge
posed by the looming skills shortage can be met, without a really significant and high priority
commitment to change. Completions are 20% below their peak in June 2013, commencements
in 2013 were less than half that recorded 5 years earlier, while in the 2014 March quarter they
were the lowest this century, and third lowest in the last twenty years.10 There has been a small
but steady rise in wastage since 2007, while in the Defence sector most of the increase since
2008 has now worked its way through the system, leaving recruitment back at the same level as
the civilian average, even at a time when the apprenticeship programs of airlines have collapsed.
This may seem like a pessimistic conclusion, but Chapter 10 also models two “boost scenarios”,
in which an increased sense of focus and purpose and, it has to be said, a significant influx of
resources starts Australia on the road to meeting the challenges outlined in the previous
sections of that chapter. It is also the case that there are significant resources existing in the
sector that could be marshalled behind a coherent industry policy. A signal from government
that it takes the needs of aviation seriously, simply for pragmatic reasons, combined with some
adroit policy innovation, could well put the Australian aircraft maintenance industry on a
renewed growth path.
10
Manufacturing Skills Australia (MSA), 2015d, pp. 46-47.
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12.6 A priority: A strategic approach to aviation/aerospace industry and
workforce development
In light of the impending shortfall of skilled aircraft maintenance labour, and the lead-time
required to reverse this decline, one of the priority projects arising out of this research would be
to develop a workforce strategy aimed at ensuring the industry’s future needs for skilled labour.
Government support this strategic planning process would be needed, via seed funding, for
example from the Industry Skills Fund, for the consultative development of an
Aviation/Aerospace Industry and Workforce Plan, providing for a coordinated workforce
development strategy across the sectors.
Aircraft maintenance is a manufacturing industry sector that straddles the worlds of aviation and
aerospace. In Australia, the greater geographic dispersion and lower capitalisation of the
regional and general aviation sectors present technological challenges to the safe operation of
these sectors whose very rationale is to overcome that isolation. Moreover there are difficulties
in the transfer of maintenance training and experience, and qualifications and licences, between
Defence and civilian MRO: even though civilian maintenance contractors and manufacturers are
significant Defence suppliers.
The Australian MRO industry needs to meet the challenges of the new diversified model of
maintenance, involving relationships among Air Operators, OEMs and independent MROs. It
must flexibly embrace work across the civilian and Defence sectors, as well as across the airline,
regional and GA sectors. Moreover, the networks between OEMs and their advanced
manufacturing suppliers, linked to the growing role of both OEMs and contracted MROs in the
provision of afterservice, point to the need for mobility between maintenance and other skilled
aerospace activity. Increased cooperation is needed among segments of industry which have so
far had relatively little to do with one another, generally serving distinct product markets,
operating under different legislative provisions, in different labour markets with different
qualification structures and employment practices. These commercial and regulatory silos have
made it difficult for skilled labour to move across the different aviation and aerospace sectors,
broadening and deepening expertise in order to take part in innovation.
A way of bringing together these sectors and markets is by building on emerging hubs, clusters
and supply chain networks, drawing in under-utilised infrastructure and creating new capacity.
As well, expansion of the MRO industry to meet emerging opportunities in the Asia-Pacific
region will need to be underpinned by the swift implementation of a workforce development
strategy. It is important to ensure that skills are not lost to the industry in the process of
company restructures, and above all, it will be essential to reverse the recent decline in the
nation’s capacity to provide broad-based training effort.
The proposed avenue for achieving these goals has three elements:
•
A National Aviation/Aerospace Industry and Workforce Development Strategy,
covering each aviation sector and aerospace supply network both civilian and Defence.
Development of this strategy will involve work to identify the measures required to turn
around the nation’s MRO industry and ensure that it contributes optimally to regional
development, export earnings, defence security and technological innovation.
•
An Aircraft Manufacturing/Maintenance Industry Forum. This forum foster the
gathering and sharing of information, and to provide structures for the collection of
advice, first on the development and then on the staged and multi-faceted
implementation of the on the development and implementation of the strategy,
interfacing with the new Industry Reference Committee and Skills Service Organisation
structures currently in the process of being established, in the monitoring of emerging
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workforce development needs, and skills planning, for new intakes, skill upgrades,
career transitions and maintenance education exports.
•
The establishment of National Aviation/Aerospace College. This will be regionally
networked, with local branches in all states and territories, reflecting different
aerospace manufacturing and aircraft maintenance clusters of strength and needs
strength and need — Defence, airline, regional aviation, GA and recreational. It will cross
the divide between the vocational education and training sector and the university
sector. It will provide high quality workforce development programs, allow broad-based
exchange of knowledge and innovation capacity, and make a strong contribution to the
export of high quality education and training.
These three initiatives are considered in turn.
12.7 Steps to creating and implementing the industry workforce
development strategy
12.7.1 A National Aviation/Aerospace Industry and Workforce Development Strategy
To encourage the development of a thriving MRO sector, networked to both air operators and
OEMs and their suppliers, impetus is needed from the maintenance and aerospace industry
through an industry-owned approach to developing a concerted and innovative strategy for
renewal is required.
This strategy would involve the development and implementation of approaches to:
•
Building a new domestic MRO industry capable of competing aggressively in the highestvalue niches of the global market
•
Rebuilding sufficient domestic MRO capacity by 2020 to permit Australia to handle a
high proportion of its own requirements
•
Establishing a system of quality control safeguards adequate to guarantee that
maintenance on Australian aircraft, whether done in Australia or elsewhere, is carried
out to best international safety standards
•
Ensuring that as many as possible of the present generation of L/AMEs remain
productively employed, and their skills and knowledge are kept current, until such time
as market demand revives in Australia
•
Reforming and rebuilding MRO training to ensure that a new generation of properly
qualified L/AMEs will be available to replace the current one as it retires
•
Developing the interface between the aviation, aerospace and MRO industries , and
between civil and Defence aviation maintenance
•
Fostering the transfer of technical innovation.
The development of such an industry and workforce development strategy would both require
and result in improved communication among parties within the current industries. Plainly such
joint planning approach will not work unless it is “owned” by the industry parties (employer
organisations, industry bodies and front-line employees and their unions).
The success of the Hunternet initiative is an illustration of the effectiveness of planning
processes, as is the strategic approach of the Queensland government and various airports in
that state. But such planning needs to be on a state and national level, and to involve a stronger
integration of sectors — the case studies in Chapter 11, from Poland’s Aviation Valley to airport
initiatives u the US, attest to the importance of strategic coordination for industry and workforce
development. Local workforce development planning may go back to the need to for a
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coordinated strategy to create industry awareness amongst school students and to promote
science, mathematics and engineering studies.
12.7.2 An Aircraft Manufacturing/Maintenance Industry Forum
The opportunity for building a thriving MRO sector, networked to both air operators and OEMs
and their suppliers, depends on improved information-sharing and a means for negotiating the
range of interests in the industry —those of tiers of government, of regions and aviation sectors,
of employer and employee organisations, and of air operators, airports, MROs and
manufacturers, whether global companies or nimble small and medium enterprises. It is
suggested therefore that the task of initiating conversation around a national
aerospace/aviation industry strategy be assigned to an Aircraft Manufacturing/Maintenance
Industry Forum, as described below.
The Aircraft Manufacturing/Maintenance Industry Forum would function as a consultative body,
an advisory body and an avenue for aerospace and aviation maintenance information-sharing.
Governments will need to endorse and facilitate the creation of this Forum and provide
secretarial and other support, as long as the initiative comes from the industry in the first place.
Because of the importance of skill transfer and mobility between civil and Defence aviation, and
the growing convergence between civilian and Defence platforms identified in this report, the
composition of the Aircraft Manufacturing/Maintenance Industry Forum should include
representation from Australian Defence Force aviation.
The basis for such a Forum or Working Group already exists, in a range of interest groups and
networks. They range from sectoral industry associations such as the GA-based Aviation
Maintenance Repair and Overhaul Business Association (AMROBA) and the Regional Aviation
Association, through industry sub-sectoral groups of employers and employees such as the
Aircraft Electronics Association, to local but cross-sectoral bodies such as the Sydney Aerospace
and Defence Interest Group and the relatively new body, Aviation/Aerospace Australia, recently
formed to raise the Australian industry’s profile. In itself, none of the existing bodies can speak
for the industry as a whole, and thus a new Forum is required, spanning all interests. A
comparable model is the National Resources Sector Workforce Strategy, seen as a dynamic
example of action on an urgent skills priority, needed to meet national economic objectives. 11
Such a body will need to interface as appropriate with the new Industry Reference Committee
and Skills Service Organisation structures currently in the process of being established. Together
they should play a key role in the monitoring of emerging workforce development needs, and
skills planning, for new intakes, for skill upgrades and skill and career transitions.
The Aircraft Manufacturing/ Maintenance Industry Forum should have the brief to take
submissions, establish specialist forums and coordinate work on the elements of the national
aviation and aerospace industry and workforce development plan.
The Forum should also function as a clearing-house for strategically important information. It
was clear from the project’s survey of MROs, that many individual firms’ development strategies
would benefit from a more systematic business planning approach. There is certainly plenty of
information available, including from industry skills councils/skills service organisations. But
identifying specific organisational requirements, and knowing how to navigate the available
information in order to find a solution, are often tasks of daunting complexity when it comes to
managing a technical business in a fast-changing globalized economy. MROs reported being too
busy to read information or attend events, and confused by changing regulatory requirements
11
Australian Workforce Productivity Agency (AWPA), 2012.
209
especially when these are not translated into “plain English” versions. Targeted, trusted and
timely information sharing can be essential, whether firms are startups orare growing, or
transitioning. They may not be fully aware of their global supply chains, or they may be
innovators searching for opportunities that they did not know existed. In the effort to remain
competitive and identify market opportunities, they need to know how to connect to funding
sources, targeted research, and strategic alliances.
12.7.3 A National Aviation/Aerospace College (NAAC)
The third element of the turnaround strategy, the proposed National Aviation/Aerospace
College (NAAC) represents a strategic approach to providing the training capacity to rebuild
national aeroskills and career paths, and to ensure that maintenance training makes a significant
contribution to Australia’s education exports.
•
This National College should consist of networked local branches in each state and
territory and draw on the combined resources of the university and TAFE sectors, linking
existing and new providers
•
It should have recognition as Part 147 category Maintenance Training Organisation, a
Registered Training Organisation, and a nationally registered higher education provider
•
It should provide quality-assured programs allowing for career pathing through
qualification structures that provide for smooth progression between advanced
manufacturing, aeroskills, licensed maintenance, engineering specialisations and
maintenance management roles
•
It should offer qualifications that are fully EASA-and NGAP aligned , in order to attract
international enrolments, playing a significant role in educational exports to meet the
coming Asia-Pacific aeroskills shortfall
•
The approach could combine the capabilities of civilian and Defence training facilities,
making greater provision for group apprenticeships and other mechanisms, to provide
new trainees with the diversity of workplace experience which will be needed to create
the flexible and versatile workforce required by the coming decade of transition
•
It will be necessary to ensure support from aerospace and aviation industry employers
for intensive shopfloor practical skills training and experience.
To avoid an over-centralised model of training provision, we propose the use of existing TAFE
and university facilities as locally-accessible branches of the NAAC. It would be funded
separately from the mainstream VET framework, and subject to the stringent quality assurance
requirements that apply to high-risk occupations, combining the capacities of VET and higher
education institutions, to take carriage of the training of Australia’s aircraft maintenance
engineers. The great advantage of this approach would be its potential to tap the large and
profitable market which is likely to exist across the Asia-Pacific region for aircraft maintenance
training and qualifications. Taking in large numbers of international students would allow such
an institution to achieve the kinds of economies of scale which are signally lacking in the present
unusually depressed Australian market, making it possible to offer a range of specialisations
which it would be uneconomic to provide purely for a local market even in healthier times.
To attract international students, such an institution will require a curriculum (ideally building on
the joint civilian/defence curriculum known as NAC95 which was developed in the 1990s and
formed the basis for Aeroskills training in Australia until it was ruled by the Australian National
Training Authority (ANTA) to be incompatible with the separation of roles under the VET
framework) that faithfully reflects the EASA syllabus as well as meeting other international
standards, in particular those in the ICAO training manual. The College would also need to take
responsibility for monitoring developments in international training reform, in particular the
210
NGAP program, to ensure that Australian training and qualifications adjust proactively to ensure
continuing alignment with international ones.
Returning to a more immediate need, for those candidates seeking initial employment in GA
maintenance (or for that matter, experienced AMEs retrenched by the airlines and seeking work
in GA), the qualification structure and Training Package should be revised to provide a seamless
pathway between small aircraft and RPT (remembering that over the next decade, both sectors
are increasingly likely to require the capability to work on a range of technologies of different
vintages), as well as a smooth transition from Certificate IV to Diploma. Group category
endorsements would apply for many small planes, and these could be added as an endorsement
to a Diploma-based B license, as well as to a Certificate IV-based SAL. Type ratings with
appropriately specified skills, knowledge and experience would be available for selected small
planes. This implies an exercise to ‘rate’ all small planes (including retrofitted ones) in terms of
their technical characteristics.
12.8 Conclusion
This project was undertaken at a turbulent time for the Australian aerospace/aviation industry.
What seemed, four years ago, as a major threat to the future of the industry, has emerged as a
significant opportunity for renewal. Nevertheless, a looming impediment needs to be addressed,
before this opportunity can be grasped. It has been established clearly that Australia will find it
increasingly difficult over the next 20 years to source its maintenance requirements offshore, in
a regional and global environment where qualified technicians will be in increasingly short
supply. Thus, there is the very real need to prevent a further wastage of industry talent, and to
move swiftly to put in place the measures needed,
•
To ensure the supply of highly-trained workers for all sectors of the domestic aviation
industry
• To help turn aircraft maintenance engineering training into a significant national export.
Three practical measures have been suggested for starting the renewal process: the
development of a strategic, cross-sectoral, industry-led planning process, the initiation of this
process by a aircraft manufacturing/maintenance industry forum, and the creation of a
nationally-networked aviation/aerospace college, oriented both to building the local workforce
and to the export market. A more specific set of reforms is outlined in the 23 recommendations
at the front of this report.
Provided these measures, or equally effective ones, can be implemented in the near future,
there is every reason to believe that the loss of skilled employment in Australian MRO will be
reversed in a few years and the occupation will emerge stronger, more relevant and more
productive than ever. On the other hand, if the opportunity is missed, there is every risk that the
decline will become irreversible, most of the new business opportunities will be pre-empted by
other countries, and Australian operators, crew and passengers will be exposed to the worst
consequences of a global maintenance skill shortage. The choice is a stark one, and will need to
be taken very soon if the opportunities are to remain open.
211
RECOMMENDATIONS
•
RECOMMENDATION 1: That a new Aircraft Manufacturing/Maintenance Industry
Advisory Forum be established, with Federal Government infrastructural support, to
provide a clearing-house for industry information and to act as a participatory planning
body to support the transformation of the MRO and MRO training industry, as part of
the broader civilian and Defence aviation and aerospace industries.
With membership to include representatives of the relevant civil and Defence industry
sectors, CASA, Skills Service Organisations, training authorities and providers, and frontline employees, this forum be tasked with generating proposals for a coordinated
approach to meeting national, rural and regional aircraft maintenance needs and to
identifying areas of competitive advantage for establishing Australia as a significant
exporter of specialist maintenance and maintenance training nationally and in the AsiaPacific region.
•
RECOMMENDATION 2: That a priority task of the new Forum be to interface closely with
the new Industry Reference Committee and Skills Service Organisation structures
currently in the process of being established. One of its roles would be to facilitate a
consultative process for the development of a workforce plan for the new expanded
industry, including a review of current job classifications and training arrangements to
facilitate mobility of skilled labour and portability of qualifications across the different
sectors.
•
drawing on the combined resources of the university and TAFE sectors, to take carriage
of the training of Australia’s aircraft maintenance engineers, to provide career paths to
and from advanced aerospace manufacturing -and to provide a commercially attractive
vehicle for an export industry in aircraft maintenance training and qualifications.
212
Appendix 1 - Methodology
Appendix 1 Methodology
A1.1 Research aims and design
The project began by addressing a perceived decline in Australian aircraft maintenance industry
capacity, prompted by linked concerns about offshoring, safety and workforce development. As
the research developed, new understandings of the future of the maintenance industry, and its
role in the wider aviation and aerospace industries, emerged.
A1.2 Methods and outcomes
RO 1. To project the supply of and demand for AMEs and LAMEs in the short, medium
and longer term, and identify causal factors.
This objective was addressed by finding answers to the following set of research questions:
RQ 1: What is the most effective way to model L/AME supply and demand on a long
term and ongoing basis? How can this approach help us establish as precisely
as possible the dynamics of the L/AME labour market, and assess the likely
shortfall (or oversupply) of skilled, qualified and licensed aircraft maintenance
engineers at certain points in the future under certain scenarios?
The skill supply was investigated by examining historical patterns of AME and LAME
employment in Australia over the past 15 years and undertaking international comparisons,
drawing out implications for future labour supply. This was done by:
•
Interrogation of publicly available data (solving estimation difficulties resulting from the
smallness of occupation) to compile trend data on patterns of entry into and exit from
the occupation, including apprentice intake, completion and placement data supplied by
Partner Organisations (POs), and compilation of available retention, attrition,
replacement and mobility figures
•
A secondary source literature review, supplemented by interviews in Turkey and Europe,
to analyse employment and MRO trends in North America, Europe and Asia-Pacific
•
Desk analysis of patterns of skilled migration intake
•
A panel survey and interviews arranged through POs. These sources provided data on
AME and LAME work histories (mobility and breadth of experience within the
occupation), patterns of acquisition of qualifications, age when people leave, factors
influencing intention to leave: remuneration, working conditions, career expectations,
whether and why L/AMEs return, and patterns of transfer among defence, general and
civilian aviation and patterns of transfer into allied occupations.
The factors affecting the demand for AMEs and LAMEs were investigated via:
•
Broad trend projections of demand for air transportation to 2025 at global, Asia-Pacific,
national, regional and general aviation levels
•
Desk analysis, stakeholder workshops and industry group consultations facilitated by
POs, continue to map air traffic projections and forecasts in all sectors (international,
domestic, regional, general aviation (GA))
•
Using the Civil Aviation Safety Authority (CASA) website, analysis of patterns of fleet
composition and age, and rate of acquisition of new aircraft to estimate future patterns
of demand for heavier and deep forms of maintenance, repair and overhaul
213
•
Mapping of Australian MROs, contractors, original equipment manufacturers (OEMs)
and aerospace manufacturers
•
A survey of MRO operators
•
Analysis of implications of workforce management policies – job design, work
organisation, productivity management, outsourcing, offshoring; shift to safety systems
approach.
The project was able to access a range of projections of present or future skilled labour
requirements in the MRO industry on a global level. Chapter 10 provides a detailed account of
how various credible international projections were compared and used jointly as the basis of a
projection model for future Australian labour requirements.
Assessing the specific dynamics of the Australian labour market proved more difficult. The main
source of Australian labour market data – the Australian Bureau of Statistics (ABS) Labour Force
series – is of limited reliability in tracking the MRO labour force because of the small sample size
of quarterly and annual data, and the last reliable count came from the 2011 Census. This count
suggested that there were 14,489 AMEs and LAMEs in Australia in 2011, of whom 40% were in
NSW and around 20% each in Queensland and Victoria (Table A1.1). Since that time, mainly
resulting from the shift offshore from Avalon and the expansion of Qantas’ Brisbane base
maintenance operations, there is likely to have been some redistribution. Chapter 10 outlines in
detail the sources, methodology and result of estimates of the maintenance workforce size.
Considerably more detailed modelling was possible for recruitment to the industry, thanks to
the comprehensive statistics published at quarterly intervals through the VOCSTATS online
database administered by the National Centre for Vocational Education Research (NCVER).
While problems were encountered with the quality of these data (notably some apparent
misclassification of apprentices to employing industries), they have provided an adequate basis
for detailed modelling of current and future flows of new skilled workers into the occupation. By
combining these with the demand figures from international sources, it was possible to model a
range of credible scenarios comparing future demand for labour in Australia against alternative
projections of demand over the next 10 years.
To supplement these publicly available data, we carried out a detailed panel survey of current
and in some cases former employees in the industry in 2012. The achieved sample for this
survey was 708. It was geographically representative (Table A1.1) but skewed to LAMEs (Table
A1.2) in part because of the initial convenience sampling approach (reliance on four Partner
Organisations – Australian Aerospace, AMROBA, ALAEA and AMWU) to undertake distribution
mailouts). One purpose of this survey was to track movements within and out of the industry.
214
Table A1.1 Panel survey responses by state/territory, compared with 2011 Census distribution
of L/AMEs
State/Territory
Survey Wave 1 , 2012
Survey Wave 2, 2014
Aust Census, 2011
Number
Valid %
Number
Valid %
Number
Valid %
2
0.3%
3
1.1%
111
0.8%
279
40.4%
102
38.8%
5697
39.3%
NT
15
2.2%
8
3.0%
452
3.1%
QLD
145
21.1%
54
20.5%
3498
24.1%
SA
30
4.3%
14
5.3%
1028
7.1%
TAS
5
7.0%
3
1.1%
44
0.3%
VIC
160
23.2%
56
21.3%
2720
18.8%
WA
53
7.7%
23
8.7%
939
6.5%
690
100.0
263
100.0
14489
100.0%
ACT
NSW
Total valid
Not specified/NZ
Total
19
11
708
274
Sources: Project LP110100335, Survey of Aircraft Maintenance Engineers, 2012 and 2014;
Australian Bureau of Statistics, 2012
While the achieved sample size was insufficient to support confident extrapolation, the cases
available for analysis were sufficient to provide at least an impression of the range of career
paths commonly encountered within this industry. A follow-up round was conducted in late
2014, but sample attrition was in the region of 60%, making it difficult to perform any usefully
reliable analyses of movements between the two years. Table A1.2 indicates that AMEs and
LAMEs were 90% reliant on an employer for work. The 40% response rate from Wave 1 to Wave
2 may have been influenced by the apparent increase in transitional status between 2012 and
2014, with an increase from 0.3% to 12.3% in respondents seeking work, changing jobs or
recently retrenched. Table A1.2 indicates that the main fall-off in response was from AMEs.
Table A1.3 indicates that Qantas employees were over-represented in the survey responses: its
actual share of civilian maintenance employment is likely to be closer to 36% than the 57% in
this table. Employment with OEMs of aircraft and components, such as Boeing, appears to be
under-represented.
Table A1.2 Wave 1 and Wave 2 survey respondents — Employment status
Employment status
Wave 1 2012
Wave 2 2014
Number
Valid %
Number
Valid %
629
16
9
38
3
2
697
11
708
90.2%
2.3%
1.3%
5.5%
0.3%
0.3%
100.0%
219
5
3
6
33
3
269
6
274
81.4%
1.9%
1.1%
2.2%
12.3%
1.1%
100.0%
Employee
Self employed (sole trader)
Self employed (employing others)
Retired
Seeking work/Changing jobs/Retrenched
Injury/ illness
Total
Question not answered
Total
Source: Project LP110100335, Survey of Aircraft Maintenance Engineers, 2012 and 2014
215
Table A1.3 Employment location – Survey respondents Wave 1
Employer
Number
Valid%
403
56.9%
Airline operator Australian main route - other
Airline operator – regional/freight
44
35
6.2%
4.9%
GA/ Helicopter
9
63
1.3%
8.9%
Independent MRO
Self employed/ Contractor
59
7
8.3%
1%
Government/ Regulator
Defence contractor/supplier
23
12
3.2%
1.7%
OEM/ Distributor
Education/ Training/ Research
2
7
0.3%
1%
Not employed in aviation/nec
Not answered/illegible
5
28
2.1%
3.5%
708
100.0%
Qantas
Total
Source: Project LP110100335, Survey of Aircraft Maintenance Engineers, 2012 and 2014
Table A1.4 sets out the range of career paths within the occupation. Chapter 3 has analysed in
more detail patterns of career mobility within this range of occupations, and also mobility and
destinations from and into other occupations indicated by Wave 1 respondents. Relative ease of
re-entry following resignation or retrenchment appears likely, but may require relocation.
In seeking an accurate picture of MRO employers, the project team undertook a mapping
exercise and a MRO survey, with the assistance of Partner Organisations. The starting point was
a list of 700 potential businesses, but organisations lacking a website or phone number, and a
heavy flow of RTS (return to sender) responses to the survey mailout, led to a revised estimate
of this number to between 345 and 400. The survey, mailed in late 2013, received 73 responses,
mainly from the GA sector. Of the respondents, 30% provided services to charter operators, 66%
were engaged in component MRO and 11% were in tied contracts with OEMs to service aircraft
or components.
The main specialisations were: structure/airframe (68%), engines (59%), mechanical components
(47%) and instrumentation (24%). In terms of size, 62% had between one and nine employees or
contractors, 19% were sole traders, 9% employed between 10 and 29 people and just over 10%
had 30 or more employees or contractors. About 41% had remained much the same size in
workforce numbers over the past four years, but 31% were smaller or much smaller, 16% were
much smaller, and 45% believed that business turnover in the next five years would be higher
(6% much higher), while 50% expressed confidence of viability in five years’ time. On balance it
appears the surveyed sector had contracted slightly over the period.
216
697
100.0%
12.8%
1.1%
0.1%
20.9%
57.2%
5.2%
3.3%
5.2%
4.0%
% of
Total
Effective
213
0
8
1
11
141
20
10
13
9
Currently
in paid
work
33
13
0
0
2
16
0
2
0
0
Retired
21
14
0
0
3
3
2
1
0
0
Not
currently
in paid
work
13
274
7
267
27
8
1
14
160
22
13
13
9
Total
Employment Status 2014 (n=274)
100.0%
10.1%
217
3.0%
0.4%
5.2%
59.9%
8.2%
4.9%
4.9%
3.4%
% of
Total
Effective
Comments – Not applicable: Includes employed outside the industry, self-employed and jobs elsewhere in aviation e.g. pilot, ground staff. The 38 Retired respondents
in Wave 1 included 6 volunteers working for example in restorations or air museums
Unreachable at Wave 1 workplace
– Returned to sender
708
5
20
8
1
146
399
36
23
36
28
Total
Total survey respondents
38
0
0
0
0
1
0
2
2
0
Not
currently
in paid
work
9
654
Responses
3
0
0
8
18
2
3
3
1
Retired
Did not answer question
17
8
Not applicable/Other employment
Blank/illegible/job not specified
1
Apprentice
138
34
Supervisor/Leading Hand
Aircraft Maintenance Engineer
18
Operations Manager
380
31
Aviation Professionals
Licensed Aircraft Maintenance
Engineer
27
Aviation Managers
Broad Aviation Job Classification
Currently
in paid
work
Employment Status 2012 (n=708)
Table A1.4 Wave 1 and Wave 2 survey respondents – Broad aviation job classification by employment status, 2012 and 2014
RO 2. To investigate the links between offshoring and maintenance quality, including
safety
This objective was addressed by investigating answers to the following research questions:
RQ 2: What issues of aviation safety, reliability and quality are raised by offshoring?
The project examined whether there were any potential safety risks resulting
from a possible failure to address workforce development issues and
continued reliance on outsourced and offshore solutions.
RQ 3: What evidence is there that maintenance-related safety incidents can be
linked to skill deficiencies under various MRO organisational arrangements?
The following sub-questions were explored:
•
What is the extent of offshoring?
•
What is the structure of the international MRO industry?
•
What characteristics of offshore MROs have been associated with safety issues?
•
What non-safety related consequences flow from deficient maintenance?
Answers to these questions were sought through:
•
Review of the international literature on offshoring and safety, in order to identify:
•
tendencies within offshore contract maintenance seen as likely to create risks in
maintenance practice and outcomes, and approaches to managing them;
•
differences of regulatory regimes and practices, and implications of approaches to
auditing safety standards
•
Interrogation of databases containing reports of safety outcomes associated with
onshore and offshore maintenance: These databases contained summaries of
maintenance-related incidents, allowing some exploration of links to training and skills
•
Interviews with managers and union officials, to identify issues driving offshoring (Table
A1.5)
•
Working with POs, the conduct of interviews and stakeholder focus groups involving
individuals (LAMEs, Regulators) who have overseen practices in overseas MROs or
certified their outcomes, and consolidation of results (Table A1.5).
Analysis of responses to the open-ended questions in Waves 1 and 2 of the panel survey
described above, in order to gain insight into employee concerns
We undertook a desk review of the academic and regulatory literatures, including the ICAO
Convention, its Articles and Annexes, as well as the relevant CASA and European Aviation Safety
Agency (EASA) regulations, and relevant training documents. The extensive “grey” literature on
the aviation maintenance industry was reviewed – including several documentaries. We
examined the statistical evidence about the safety of aviation in general, and outsourcing /
offshoring in particular. We conducted ten focus groups with small business employers, skills
council officials, defence maintenance personnel, training providers, LAMEs, and GA employers.
We conducted 45 structured and semi-structured interviews with industry and regulatory
experts, current and former CASA officials, training managers, employers, union officials and
license holders.
218
In addition, we include here some data drawn from the Wave 1 survey of 708 licensed and
unlicensed aircraft engineers undertaken in 2012/14 (Tables A1.1-3). The survey invited
respondents to make any additional comments they wished about their industry. Of the 384
respondents who answered this question in Wave 1, 167 made negative comments about the
current system of training and licensing; there was a similar proportion of responses in Wave 2.
The interview and survey comments inform Chapters 3 to 9.
Table A1.5 Interviews and focus groups conducted, 2011-2014
Categories
Numbers
Dates/Occasions Month/Year
INTERVIEWS
45
ALAEA Officials
7
LAMEs (individual)
Former HR Manager (large airline)
Training Manager (large airline)
Former CASA Official
Employer Organisation Representative
Training Manager (MRO)
Training Policy Official
RAAus Aircraft Mechanic
Air Engineer International Senior Officials
(Secretary, President, Vice President)
Senior Maintenance Manager, Overseas MRO
Training Provider Senior Managers
CASA Inspector
GA employer
Aircraft Component Repairer
Senior Maintenance Manager, Defence
Contractor
Senior Maintenance Manager, Major Airline
Former Quality Inspector, Major Airline
Trainer
FOCUS GROUPS
GA Employers
LAMEs – Major Airline,
LAMEs – Defence Contractor
Mixed (ex CASA; LAME; Employer)
Training Providers
Defence Maintenance Personnel
Skills Council Officials
Union Officials
6
1
1
2
5
1
1
1
3
0611;0711;2710;0412; 0312;
0313; 0814
08(3); 09(2); 0514
09
1109
0312; 1213
1109; 0711; 0711; 1013; 0814
0711
1109
0611
1011; 1011; 0411
1
4
2
1
2
3
1112;
0611; 0313 (2 – ATS) 1013(KB)
1113 (2)
0811;
0811;0811
0213; 0213; 0313
1
1
2
10
1
1
1
0914
0414
050714;060714
3
1
1
2
070609
0611
0313
0713
1012; 1213(2)
0313
0514
09(ALAEA); 0711 (AMWU)
Two International Conferences of the Air Engineers International (AEI) – the international peak
organization for national unions of aircraft maintenance engineers – were attended, in 2011 and
2013, and notes taken. This material has been excerpted for information about the
implementation of the new licensing system and the way its protective role is being eroded
through the combined effects of commercial pressure, political fashion and a decline in
attention to the continuing risk factors.
While many people with experience in aircraft maintenance offshoring were willing, indeed
eager to talk “off the record”, far fewer were willing to give recorded interviews that conformed
219
to university Research Ethics Protocols. These people, however, contributed to our stock of
general if unattributable “industry intelligence” that has partly informed this Report.
Patterns in safety-related accidents and incidents were identified, and then an attempt was
made to establish the contribution, respectively, of offshore maintenance and of maintenance in
general. Chapter 4 begins with a detailed inferential analysis of the accident statistics over the
full period since the end of World War II, based on data from the international privately run
Aviation Safety Network. These data were then triangulated with other reputable figures from
international sources including the ICAO, IATA and most recently, the Air Safety Institute within
the Aircraft Owners and Pilots Association in the US, and with the detailed annual statistics
published for Australia by the Australian Transport Safety Bureau (ATSB). All these data sources
are based on official crash reports and other incidents reported to National safety authorities,
though their findings differ to some extent owing to differences in the segment of the fleet
covered by each, and in some cases on the methods of analysis used.
Because of the relatively small number of serious accidents which occur in main route
commercial aviation, statistical analysis by itself is not able to answer all the relevant questions.
To fill the gaps in the picture, we developed a conceptual model based on the extensive
international scholarly literature in the area of aviation and more generally of occupational
safety, which was able to provide us with at least an impressionistic picture of the threats to
passenger and aircrew safety that actually or potentially exist. Chapter 5 sets out this model and
its sources in more detail.
In the case of the international statistics, the figures were disaggregated by country, but in all
cases referred to the country of registration rather than that in which the accident had occurred
or the maintenance had been carried out. As a result, we were only able to rely on qualitative
sources and a number of specific accident investigations carried out by the US National
Transportation Safety Board in past decades, which have been the subject of earlier published
research by members of the project team. The international sources were generally more
informative on the number of accidents in which errors and oversights in maintenance were the
primary or contributory factor behind the accident. We have summarised the data from these
sources and matched them to the accident statistics published by the ATSB to reach an estimate
of the contribution of maintenance failures. While the estimates vary widely from source to
source, they were sufficient once again to identify the key areas in which continuing vigilance is
required.
RO 3. To investigate AME/LAME access to skills / qualifications development and
possible links to (a) safety and (b) LAME retention
This investigation was carried out initially by seeking answers to the following research
questions:
RQ4. How can training and licensing, workplace skill development and recognition
best contribute to L/AME workforce retention in Australia? What is the role of
heavy maintenance as a skills incubator?
RQ5. How possible is it to transfer into aircraft maintenance from allied trades?
What role does recognition of comparable/similar skills in allied trades and
defence maintenance play in preventing transfer in to the occupation?
A starting point for exploring these questions came from:
•
Desk research and field trips to RTOs/MTOs and efforts to study a European and an
Australian MRO facility
220
•
Analysis of training materials including the revised Australian Aeroskills, its European
and US counterparts training package, as well as the ICAO Training Manual
•
Comparison of qualification structures, skills recognition and work processes of L/AMEs
in defence, civil aviation and allied trades to ascertain the extent to which qualifications
overlap, and modules are common
As the research progressed, a further crucially important question emerged:
RQ5a. What is the industry impact of changes to CASR processes for regulating
continuing airworthiness maintenance organisations, MROs, the licensing of
maintenance engineers, and maintenance training organisations? To what
extent has harmonisation with the EASA system been achieved?
In workshops and focus group discussions (Table A1.5) using the expertise of POs,
•
Training package(s) were mapped to identify the uniqueness of aviation, areas of overlap
and potential transfer paths; the sort of bridging training that would be necessary
•
Different perceptions were explored as to the effectiveness of apprenticeship and
training methods in producing engineers with the skills required to compete
internationally
•
Views were collected as to the availability of parts of the training system to some
MROs/operators, for example in GA (this latter question was also explored as part of a
survey of MRO operators).
It was noted that the process of regulatory reform is still under way, and the project may have
picked up teething problems that will be resolved. Nevertheless, adverse impacts were identified
from the uncertainties generated by the change process, its incompleteness in the GA sector,
and lost years of opportunity to build a strong maintenance training presence in the Asia-Pacific
region.
As noted under RQ1, the absence of reliable ongoing statistics on the Australian MRO labour
market made it difficult to reach any statistically based conclusion on the dynamics of the
market as a whole over this transition period. However, it was possible in Chapter 10 to produce
confident estimates of the performance of the training sector, primarily in terms of output and
capacity, but also shed some indirect light on quality issues, mainly through movements in the
level of wastage. Once again, qualitative evidence based on the knowledge of industry insiders
proved more helpful for analysing the effectiveness of the current training system and its
interaction with aviation safety regulation.
RO 4. To investigate the potential for a sustainable MRO and aeroskills training
industry in Australia, and to estimate its costs and benefits, by reference to overseas
practice and taking account of Australian policy conditions
Again, as the research progressed, the final research question took on a range of increasingly
specific forms:
RQ 6a: What policy approaches, by operators and government, might influence the
future demand for skilled and qualified labour in aircraft maintenance in
Australia?
RQ6b: How can the relationship between future L/AME supply and demand be
modelled, using scenarios based on these variable policy options?
RQ 6c: What are the potential benefits of an active government approach to
workforce planning? What are the costs of government intervention and
support and what are the costs of not doing so?
221
The questions were addressed through:
•
Desk analysis using scenario modelling
•
Meta-analysis of overseas cost/benefit studies
•
Consultation with industry experts and interest groups; advanced manufacturing site
inspections; participation in aviation and manufacturing forums at industry and regional
level; workshops in order to develop proposals for an enhanced role for Australian
MROs in the various aviation sectors
The potential for an export industry in aviation maintenance training was estimated on the basis
of ICAO projections for training needs and shortfalls over the next 20 years, with particular
reference to the Asia-Pacific region where we envisage most of the demand arising for an
Australian product.
A mapping was undertaken, state by state and region by region, of the “nesting” of aircraft
maintenance within both the aviation industry and the aerospace industry, with growing
intersections between civilian and defence maintenance contractors. Global and local supply
chains and models of integration were identified, including links with Tier 1 advanced
manufacturers, resulting in maps of the relationships amongst over 900 Australian air operators,
third party maintenance providers, aviation business services, aircraft and component
manufacturers and training and professional service providers.
Emerging requirements in the regional and GA sectors were identified, along with the role of the
Airport Master Planning process. Case studies of multiplier and spillover effects of aircraft
maintenance and manufacturing hubs were identified, along with estimates of the economic
contribution of the GA sector, with evidence of rates of return where tax incentives and
infrastructure are have been offered.
Without attempting to put a dollar value on them, the costs of not intervening to stimulate the
maintenance industry, were identified, such as loss of potential and actual employment
opportunities, of potential revenue from maintaining other countries’ aircraft and exporting
maintenance training; risks to national technical capacity, very important in defence; potential
safety and reliability issues; and the risks to regional and rural infrastructure. Potential
specialisations were identified, building on existing initiatives.
222
Appendix 2 Required Hours of Training and
Experience under International and Australian
Regulatory Structures
This appendix describes the methodology used to compare international standards of aircraft
maintenance training and licensing, and Australian training practice in respect of knowledge,
skills and experience. Whilst this exercise cannot be done exhaustively it can be shown that
there is a strong case that Australia provides fewer training hours in some areas than its
international comparators. It follows that a more sustained study is needed to establish this
claim in detail, as well as to suggest alternative approaches to the issues identified in Chapter 9.
Where the analysis relies on a funding guide based on the Aeroskills Training Package MEA11,
the comments refer to that Training Package, now superseded. Where possible the analysis
refers to the 2015 Training Package, released in February 2015.1
International reference points for numbers of training hours, and training content, are found in
the International Civil Aviation Organisation (ICAO) Training Manual,2 and the European Aviation
Safety Agency (EASA) Basic Regulations Parts 66 and 147. Unfortunately, while EASA does clearly
specify the total number of hours to be allocated to category training (as well as the mix of
theory and practice) it does so only at the level of the qualification underlying the particular
licence, and not the more detailed level of the individual module. 3 The ICAO Training Manual,
however, does provide recommendations of training hours for individual modules, some of
which it refers to as “ICAO Chapters”. The usefulness for comparative purposes of the hours
figure attached to each chapter, and to each chapter component, is compromised because of
how the manual lists the total number of hours deemed necessary to learn each module as if it
were being taught on its own, whereas the modules are often combined for teaching purposes.
While this consideration compromises the utility of the analysis that follows, the exercise is
worth undertaking, whilst taking account of the “inflated” ICAO hourly estimates. Although
these do not correspond exactly to the EASA structure, they are near enough for our present
limited purposes. To track correspondence more precisely, a finer level of detail is needed, but
this is beyond the scope of this study — a further reason for a comprehensive look at Australia’s
compliance with international standards.]
The analysis that follows compares ICAO and EASA specified training hours with Australian
funded hours. Aiding a comparison between ICAO training specifications and the Australian
version of the EASA training requirements (as detailed in the CASRs) is the fact that both do
specify components of modules, and their associated training hours, at a similar level of
granularity. Also usefully, the Victorian Purchasing Guide4 allocates the nominal hours by Unit of
Competency, and these can be added up to arrive at a figure of funded hours per module. The
result facilitates a comparison of the hours allocated to the EASA/CASR modules and the ICAO
ones. The route by which the comparison is accomplished is detailed, as follows.
1
Manufacturing Skills Australia (MSA), 2011, 2015; State of Victoria, Department of Education and Early
Childhood Development, 2013
2
International Civil Aviation Organisation (ICAO), 2003.
3
The Civil Aviation Safety Regulations (CASRs), although specifying type training hours precisely, do not
specify numbers of training hours necessary for the attainment of the qualifications that underpin
licences.
4
State of Victoria, Department of Education and Early Childhood Development, 2013.
223
A2.1 Do funded training hours in the Australian system match
international standards?
The starting point is a comparison between EASA and Australia. EASA clearly specifies numbers
of training hours necessary for particular types of licence – as well as the proportion of the
training hours that are to be assigned to theory and “practical skills training” (to use ICAO
terminology). They are represented in the Table A4.1, taken from the EASA Basic Regulation Part
147, 28 November, 2011 (p. L 315/160).
The Civil Aviation Safety Authority (CASA) does not list hours necessary for category (licence)
training. But another reason why it is difficult to establish an “apples with apples” comparison
between Australia and EASA is that the European figure includes what ICAO calls “practical skills
training” (supervised practice and learning) done within training institutions (the EASA figure
specifies the ratio) – whereas the Australian system conducts supervised practice and learning
within training institutions, but also on the shop floor in apprenticeship arrangements. It is
therefore more difficult to specify the total number of hours of “practical skills training”, and
even more difficult to ensure practice accords with them.
These limitations aside, let us first compare EASA mandated hours (Table A3.1) with funded
hours allocated to each qualification (Table A3.2). The Victorian Purchasing Guide5 for the
MEA11 Aeroskills Training Package6 determines how many hours the Victorian government will
allocate training providers to deliver particular qualifications and “units of competence”, and
what funding rates per hour apply. This publication sets a benchmark for the funding practices of
other States, although as mentioned above few states deliver full funding to diploma level. Table
A3.2 has been prepared from that resource, and (when compared with the EASA chart above) it
indicates that in terms of aggregate allowed funded training hours Australia and EASA are not far
apart – if anything Australia exceeds the EASA requirements marginally, with the notable
exception of the Certificate II in Aircraft Line Maintenance (which underpins the Category A
licence).
Table A2.1 Training hours required and proportion of training that is theoretical, EASA/ICAO,
2003
Basic Course
5
6
Duration (in hours)
Theoretical training ratio (%)
A1
800
30 to 35
A2
650
30 to 35
A3
800
30 to 35
A4
800
30 to 35
B1.1
2400
50 to 60
B1.2
2000
50 to 60
B1.3
2400
50 to 60
B1.4
2400
50 to 60
B2
2400
50 to 60
State of Victoria, Department of Education and Early Childhood Development (2013).
Manufacturing Skills Australia, 2011.
224
Appendix 2 - Required Hours of Training and Experience under International and Australian
Table A2.2 Australian aircraft maintenance training qualifications - Nominal hours
Qualification
Qualification Title
AQF level
Nominal Hours
MEA20510
Certificate II in Aircraft Line Maintenance
II
620
MEA40707
Certificate IV in Aeroskills (Mechanical)
IV
1580, 1,750
MEA40610
Certificate IV in Aeroskills (Avionics)
IV
1,600
MEA50110
Diploma of Aeroskills (Avionics)
V
2,045
MEA50211
Diploma of Aeroskills (Mechanical)
V
2,800-2,900
While EASA does clearly specify the total number of hours to be allocated to training (as well as
the mix of theory and practice) it does so only at the level of the qualification, not the level of
the individual module. To make some comparisons at the module level between numbers of
Australian training hours and the hours specified by EASA, we turn to the ICAO Training Manual
which specifies the content and training time (and learning level) of specific modules. The ICAO
chapters, specified in the ICAO Training Manual, map only inexactly onto the EASA modules. This
is visible in the following incomplete table (Table A3.3), which establishes that there is significant
correspondence for the theory modules, although not for some of the others.
Table A2.3 Mapping exercise seeking correspondence between EASA modules and ICAO
Chapters
EASA Modules
ICAO Chapters
1 Mathematics
Ch. 4. Natural science and general principles of aircraft
2 Physics
3 Electrical fundamentals
4 Electronic fundamentals
5 Digital techniques electronic instrument
systems
Ch. 7. Aircraft engineering and maintenance: Avionics:
Electrical and Instrument
6 Materials and hardware
Ch. 8. Aircraft engineering and maintenance: Avionics:
AFCS/Navigation Radio
7 Maintenance practices
Ch. 10. Practical Maintenance Skills: Airframe
8 Basic aerodynamics
9 Human factors
Ch. 9. Human Performance and Limitations
10 Aviation legislation
Ch. 3 Civil Aviation Requirements, laws and regulations
11 Aeroplane aerodynamics, structures and
systems
ETC
It is thus possible to examine, albeit roughly, the extent to which the numbers of hours
stipulated by ICAO to achieve requisite levels of learning in specific chapters compare with
roughly corresponding modules in the EASA syllabus (which is reproduced almost exactly in the
CASRs). The material in EASA Modules 1, 2 and 3, for example, appears to be covered in Chapter
4 of the ICAO Training Manual, where it is allocated 445 formal training hours. An exploration of
the Victorian Purchasing Guide reveals that 120 hours is allocated for this theory training. This
point is established as follows.
The Victorian Purchasing Guide (p. 8) specifies that 120 nominal hours’ funding can be claimed
by RTOs for student achievement of MEA201B – a unit of the MEA011 Training Package (see the
next section, where we discuss the very large claimed coverage of the Australian content of the
unit of competence MEA201B). This competency is described as “covering” extensive content
225
from the CASR/EASA modules. In Table A3.4 below, the left column lists the theoretical content
that MEA201B covers. Corresponding content at the “sub-chapter” level from the ICAO Training
Manual Appendix 2 is aligned to it. Despite being organized slightly differently, it contains
specifications of recommended training hours associated with each “sub chapter module”, and
these can be summed for the whole module. For purposes of presentation, a truncated version
of the table covering the EASA modules in comparison with the ICAO content is used.
The time specified by ICAO to cover the knowledge content of the key EASA theory modules 1, 2,
3 can thus be estimated to be in the order of 445 hours. The equivalent figure in Australia is 120
hours — significantly less.
Note: MEA148,7 which now “covers” the EASA/CASR part 66 knowledge content for
Mathematics and Physics, is a new Unit of Competence, and therefore there are as yet no
guidelines in the Victorian Purchasing guide as to numbers of funded hours it will attract.
Table A2.4 Hours comparisons, selected EASA/CASR modules
EASA/CASR Module
1. Mathematics
ICAO Comparator Unit
Hours ICAO
(Theory only)
(not exact)
Chapter 4: Natural science and
general principles of aircraft:
Hours Australia (Total off
JT training – and some
On JT)
75
4.3 Mathematics
2. Physics
4.4 Physics
70
3. Electrical
Fundamentals
Chapter 7: Aircraft engineering
and maintenance: Avionics –
Electrical and Instrument
300
445
Total hours
120
A2.2 How much theory content is mandated in Training Packages?
This section explores the extent to which theory is stipulated in competency based Training
Packages, which, in Australian Training System, guide assessment. Appendix 1 to MEA11 states
that particular competencies should “cover” particular knowledge content for CASA licensing
purposes. Thus under “Assessment Requirements” the Training Package says:
Underpinning skills and knowledge must fully cover the Civil Aviation Safety
Regulation Part 66 licensing topics as listed by licence and unit of competency
in Appendix 1 to this Training Package.
Where individuals are seeking the grant of an Aircraft Maintenance Engineer
Licence … in Categories A, B1 or B2 it must be demonstrated that the
knowledge requirements of the syllabus were fully covered in the underpinning
knowledge applicable to the units of competency relevant to the licence
sought (emphasis added)8
In this Appendix there is a table for each A and B1 Licence, and for the B2
Licence (or the equivalent maintenance authorities) in which syllabus modules
and topics applicable to each licence are listed, along with the units of
7
Manufacturing Skills Australia (MSA),2015.
8
Manufacturing Skills Australia (MSA), 2011, p. 41
226
Appendix 2 - Required Hours of Training and Experience under International and Australian
competency that are expected to provide the required knowledge ( emphasis
added).9
This table is modified below (Table A3.5) to show how different competency standards are
required for different licences. However, here the discussion is confined to reproducing the first
two modules, which identify the competency standards described as “fully covering” the
knowledge requirements of the CASA/EASA syllabus. Also included in this table is part of Module
3 to establish that all the content of Modules 1, 2 and much of Module 3 is deemed to be “fully
covered” by the competency standard MEA201B (at least for the B level licences). This must be
a voluminous competency standard indeed! The full title of this competency standard is
MEA201B Remove and install miscellaneous aircraft electrical hardware/components. Its
elements are
•
Remove aircraft electrical hardware
•
Install aircraft electrical hardware
The theoretical knowledge of Modules 1-3 is “covered” in the “Required Skills and Knowledge”
section of the Competency Standard by the following statement
•
electrical fundamentals and related mathematical and physics principles.
Maintenance Category providers have expressed concern at this, arguing that the coverage does
not provide any but the post elementary guidance for training programs. While it is true that
the two and a half EASA/CASR modules are “covered”, the nature of the “coverage: is not such
as to provide any but the most elementary guidance for training programs. Educators must draw
from elsewhere to flesh out training knowledge content, and this will allow for the
fragmentation of knowledge content.
Since the above was written, the MEA11 Training Package has been superseded by the new MEA
Aeroskills Training Package – which is not referenced to a particular year. Appendices to this
new Training Package contain much new work aimed at cross referencing the CASA Knowledge
Syllabus to the competency standards. MEA148 Apply mathematics and physics in aviation
maintenance, a new unit of competence, in its assessment guidelines, specifies the knowledge
content necessary to be covered in more detail than did the corresponding competency
standards (MEA201B) in MEA11. The content is specified at the level of content headings, and
there is no question of the competency statements substituting for a curriculum document,
since they were never designed to do so.
In November 2015, MSA advised that it is in the process of publishing a Companion Volume to
the Aeroskills Training Package, providing advisory information based on discussions with CASA.
It is designed as an “interface” between MEA Aeroskills qualifications and the additional CASA
requirements that must be met for the granting of a licence. It provides a detailed alignment
between the CASA licensing syllabus and various MEA Aeroskills Training Package units of
competency. Topic lists mandate content for Common Units (21 pp.), Avionics (158 pp) and
Mechanical (182 pp.) These lists, despite the use of terms like “mandatory” and “syllabus”, may
clarify CASA requirements, but leave the RTO and educator with the responsibility of shaping a
theoretically coherent curriculum and arguing for the hours required by a learner to acquire the
theoretical understanding and practical experience implicit in the topic headings.
The ICAO Training Manual specifies in Chapter 9 that a large number of hours also be allocated
to skills training (as distinct from knowledge training). Once again these are difficult to compare
9
Manufacturing Skills Australia (MSA), 2011, P. 89.
227
to Australian circumstances, but the following are indicative: Chapter 10, practical maintenance
skills: Airframe = 1,825 hours; Chapter 11 Practical maintenance skills: Engine and Propeller =
1,000 hours; Chapter 12 Practical maintenance skills: Avionics – Electrical, instruments,
autoflight and radio = 3,775. By contrast, the Australian training system deems that a portion of
skills training and knowledge training takes place within the training institution (MTO) within the
specified hours. Some skills training is also deemed to take place in the workplace, but it is
difficult to apportion between this and the theory training.
Table A2.5 Alignment between CASA licensing syllabus and Aeroskills units of competency
Units of Competency Providing Full Coverage
Syllabus Reference A1 Licence
A1.1
B1.1 (Mech)
B2 (Avionics)
Module 1 Mathematics
MEA345A
MEA201B
MEA201B
Module 2 Physics
MEA345A
MEA201B
MEA201B
3.1 Electron Theory
MEA265A
MEA201B
MEA201B
3.2 Static Electricity and Conduction
MEA265A
MEA201B
MEA201B
3.3 Electrical Terminology
MEA265A
MEA201B
MEA201B
3.4 Generation of Electricity
MEA265A
MEA201B
MEA201B
3.5 DC Sources of Electricity
MEA265A
MEA201B
MEA201B
3.6 DC Circuits
Not required
MEA201B
MEA201B
3.7 Resistance/Resistor
Not required
MEA201B
MEA201B
3.8 Power
Not required
MEA201B
MEA201B
3.9 Capacitance/Capacitor
Not required
MEA201B
MEA201B
3.10 Magnetism
Not required
MEA201B
MEA201B
3.11 Inductance/Inductor
Not required
MEA201B
MEA201B
3.12 DC Motor/Generator Theory
Not required
MEA203C
MEA203C
MEA264A
MEA203C
MEA203C
Module 3 Electrical Fundamentals
3.13 AC Theory
3.14 Resistive, Capacitive and Inductive
Circuits
3.15 Transformers
Not required
MEA203C
MEA203C
Not required
MEA203C
MEA203C
3.16 Filters
Not required
MEA203C
MEA203C
3.17 AC Generators
Not required
MEA203C
MEA203C
3.18 AC Motors
Not required
MEA203C
MEA203C
It is also necessary to revisit the issue of “practical experience”. The ICAO Training Manual
recommends two years of experience (phase three) for each of the categories of Airframe,
Engine and Avionics for base maintenance, and three years for line maintenance. EASA
regulations specify numbers of years of experience slightly differently and in more detail. The
EASA “Basic Regulation” (Annex III. 66.A.30) specifies (for Category A and B1.2 and B1.4) three
years practical experience if the applicant has no previous technical training; two years if they
have “relevant” technical training, and one year practical maintenance experience on
“completion of a Part-147 approved basic training course” [Annex III. 66.A.30(a)1(iii)]. The VET
system now has the task of supervising the documentation of what ICAO calls “practical
maintenance experience”, while the opportunities to acquire that experience are rapidly
vanishing.
228
Appendix 3 Case Studies of Potential Aviation, MRO
and Aerospace Clusters
The tables in Appendix 3 provide examples of aviation and aerospace business clusters within
regions of different types and sizes, to which air operators and MROs have links. The numbers of
organisations of each type are likely to be considerably understated, particularly in the case of
manufacturing supply chains. They represent those that the researchers were able to identify
from publicly accessible databases and websites The examples of firms under each table were
selected out of many that could have been chosen to indicate differences in the types of
activities characteristic of each cluster.
GA Class A Operator
5
GA Class B Operator
1
Defence contractor
3rd Party MRO
10
15
GA-specific MRO
21
OEM
5
Education/Training
6
Aviation Services
8
Manufacture
21
10
Total
102
In-house MRO
Also MRO service to other operators
In-house MRO
MRO (former Qantas Defence
Services)
TLS for OEM
Manufacture of specialist
components
Sourcing of parts
Design of integrated systems –
simulation
Whole aircraft/airframe MRO
Component MRO
TLS for OEM
Component supply and servicing
Generalist Aircraft/airframe MRO
Component MRO
TLS for OEM
Also AMO
TLS
Maintenance Training Organisation
Commercial flight training
GA flight training
Component supply/logistics
Aircraft sales/leasing
Component manufacturer/installer
Tier 1/2 supply chain
Manufacture of tools, materials
Design, modification approval,
testing
Audit
4
1
1
S21M
Design
Approver
Part 147
MTO
Part 145
AMO
4
1
1
1
1
2
2
4
6
4
1
4
7
13
1
2
3
1
3
2
5
3
5
12
4
1
2 Type
2 Type
0
3
3
1
1
1
2
0
2
1 Type
1
1
1 Cat
1 Type
2
1
8
3
2
102
229
Part 42
CAMO
Capability
AOC
Number
Main Business Activity
Total
Table A3.1 Aviation/aerospace cluster — Western and South-Western Sydney
8
1
14
1 Cat
6 Type
5
Western and Southwestern Sydney - Examples
Airbus/EADS Australian Aerospace, a helicopter assembly company located in Brisbane and a Defence
maintenance contractor with sites in Adelaide and Sydney. Now part of the Airbus Group, its Defence
contracting work in Western and Southwestern Sydney includes deep maintenance life-extension
structural support for the AP–3C Orion and through-life-support for C-130J Hercules transports. At other
sites, the company provides support for the RAAF’s Airbus A330-based Multi-Role Tanker-Transport
(MRTT) aircraft and F/A18 (Classic) Hornet fighters (Airbus Group Asia Pacific, 2015).
Bilyara is an aviation consulting firm at Bankstown, that developed from HDH, with divisions providing
engine overhaul, engine and engine component inspection and repair, scheduled engine maintenance and
fault diagnosis, and other whole-aircraft deep maintenance projects involving inspections, overhauls and
modifications. Another division provides sales and support of high- tech radar, navigation and aerial
mapping equipment; complex project management and subcontracting; and advanced technology design,
development and maintenance (Bilyara Aviation Services, 2015).
Quickstep Holdings Bankstown is an advanced manufacturer of carbon fibre composites for defence,
aerospace and automotive industries, and has developed an out-of-autoclave Resin Spray Technology.
Partners: Northrop Grumman and Airbus/EADS. With a Federal Government Development Grant, in 2014
it signed a 14 year agreement with Marand, furthering links with BAE Systems (UK), and Lockheed Martin
(Fort Worth). Its technology is being used by ORPE Technologiya to develop a satellite heat shield and USbased Vector Composites to manufacture composite parts in-house. In January 2015, a technology
transfer agreement with Thales opened a process plant in Munich. Nadcap accreditation allows pursuit of
contracts with Airbus, Boeing and other manufacturers requiring this accreditation throughout their
supply chain (Quickstep Technologies, Newsletters and Quarterly Reports 31/1/2014; 1/4/2014;
15/07/2014; 2/10/2014; 27/1/2015; 26/2/2015).
The Safran Group including Sagem Australasia Pty Ltd and Turbomeca, is a Defence/Civilian provider of
afterservice and a Centre of Excellence for optronics, avionics, electronics and critical software. Has as
EASA and FAA Part 145 approval for work on engines via a joint company with GE - CFM, and LEAP,
performing deep maintenance for Pacific region of Arrius and Arriel turboshaft engines (Safran, 2015)..
Northrop Grumman’s Integrated Defence Services (acquired in 2014 from Qantas Defence Services)
operates from Richmond RAAF Base performing depot-level maintenance, repair and modification of C130H Hercules aircraft including structural and mechanical components; and at Villawood providing
maintenance, repair and overhaul of Rolls Royce T56 and Adour gas turbine engines (Northrop Grumman,
2015).
230
Appendix 3 - Case Studies of Potential Aviation, MRO and Aerospace Clusters
Part 145
AMO
In-house maintenance
2
2
2
1
GA Class A Operator
23
In-house maintenance, may also
supply maintenance services
23
23
1
1
GA Class B Operator
1
1
Defence Contractor
3
Parts sourcing
Design/manufacture of
systems/components
Tied contract
Aircraft MRO (nose-to-tail,
refurbishment)
Component MRO
TLS for OEM
Aircraft MRO (generalist)
Component MRO (may also source,
install parts)
MTO
Intro aviation skills training
Flight training
Component manufacture
Small aircraft manufacture
Tier1/2 Supplier
Tool manufacturer
Parts sourcing
Aircraft sales, ownership broking,
airfield management
Modification design/ approval,
testing, audit
1
3rd Party MRO
14
GA-specific MRO
59
Education/Training
3
Manufacturing and
Engineering
12
Aviation Business
Services
18
6
Total
141
231
S21M
Design
Approver
Part 42
CAMO
2
Capability
Part 147
MTO
AOC
Regional Airline/
RPT Air Operator
Total
Number
Table A3.2 Aviation/aerospace cluster — Queensland – Regional/rural
2
1
1
6
2
1
6
1
33
1
1
4
4
1
1
26
2
1
1
1
6
2
2
2
10
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
2
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
8
0
0
0
0
0
6
0
0
0
0
4
141
31
5
20
0
7
1
6
Regional/rural Queensland - Examples
Milspec Services Pty Ltd, a subsidiary of a Texas firm, specialises in total logistical support for the ANZ
Defence Forces and is a CASA approved distributor of aircraft parts and an Australian Government
Defence approved supplier. It provides technical and engineering support for all types of Defence aircraft
and other vehicles, including spares procurement, inventory management, and repair and overhaul
programs (Milspec Services, 2015)
Aircraft Composites Australia at Caloundra, is a GA MRO with CASA Part 145, CAR 30, one-off production
and APMA approval to work on composite, composite to metal and sheet metal repairs (Aircraft
Composites Australia, 2015.).
Helibiz at North Queensland’s Airlie Beach is a GA MRO organisation with CASA approval to conduct
service and maintenance on most helicopters and fixed wing aircraft, has tie-in to large Robinson
inventory, does remote servicing, and has authorisation to do R22 and R44 rebuilds and overhauls, other
aircraft modifications and upgrades and avionics installation (Helibiz, 2015.).
The Australasian Aviation Group – Cairns (AAG-C) was formed in 2006, as a one-stop shop for owners,
operators, pilots and maintainers of both fixed and rotary wing aircraft. It includes two regional airlines
(West Wing and Hinterland) and several GA operators. Cert II Aviation (not maintenance) training is
provided at the Cairns Aviation Skills Center, and there is a branch of Brisbane-based Part 147 MTO
Aviation Australia. In addition to air operators with MRO capability, the Group includes a branch of
Hawker Pacific and the main hangar of its subsidiary Australian Avionics. Among five other MROs are two
which pitch to Indonesian, PNG and South Pacific GA markets and a GA MRO with Australian Part 145
approval (Far North Queensland). There is also a branch of PTB (an engine MRO) and Five Rings (a S31 M
authorized design approver). The aviation industry is seen to contribute to Cairns’ tourist appeal and also
to benefit from it. There may be some vulnerability as mining passes its peak, but AAG-C continues to
affirm the strength of its international, national and regional markets. But a stabilizing presence is Hawker
Pacific and its subsidiary Australian Avionics, which provides services to regional centres throughout
Australia and internationally. Its Cairns workshop can handle highly sophisticated equipment, its extensive
inventory includes new and overhauled equipment and it operates a large AOG rental/exchange pool
(Australasian Aviation Group, Cairns (AAG-C) (2015).
Flying Colours, is an Australian-owned company at Townsville, providing painting refinishing of exterior,
cabin interior and components for the civil RTP/airline, corporate jet and defence aircraft sectors. The
company has worked on aircraft ranging from Iroquois and Chinook helicopters to Boeing 737-800s.
Clients include Qantas, Cobham, Virgin, Alliance, BAE Systems, Boeing, the Army and the RAAF (Flying
Colours, 2015).
232
4
Defence contractor
9
3rd Party MRO
6
GA MRO
13
OEM
3
Education/
Training
3
Aviation Services
6
13
Manufacture
4
Total
64
Uses tied maintenance contractor
In-house MRO
In-house
OEM/TLS
Component manufacture/
installation
Custom engineering design &
manufacture – integrated systems,
simulation
Whole aircraft/ airframe MRO
Component MRO
TLS for OEM
Component supply/servicing
Whole aircraft MRO
Component MRO (may also source
specialist parts or perform NDT
Also AMO
Design, R&D, TLS
MTO
GA flight training
Aircraft sales/ leasing/ charter broker
Labour hire
Component manufacture
Integrated systems /safety
management software
Manufacture of tools, processes,
materials
testing
1
1
1
1 Type
6
1
1 Type
1
2
2
1
6
1
1
1
1
2
4
1
2
1
2
1
1
1
1
2
2
2
3
7
1
1
7
2
1 Type
1 Cat
1
1
2
1
4
64
233
1
2
S21M
Design
Approval
Capability
AOC
Part 147
MTO
GA Class B Operator
Part 145
AMO
3
Part 42
CAMO
GA Class A Operator
Number
Total
Table A3.3 Aviation/aerospace cluster — South Australia - All
3
6
1
9
1 Cat
3 Type
4
South Australia - Examples
Aerovalley Holdings has capability extending from design and APMA-approved component modification,
to avionics systems installation and repair (Aerovalley Holdings,2015).
BAE Systems — This UK-based Defence contractor, over its 50 year history in Australia, has acquired a
range of aerospace, electronic and logistics operations. It is also an OEM of regional and defence training
aircraft, and a source of technology transfer in integrated systems avionics, night vision, 3D metal parts
printing and composites. It recently moved into civilian maintenance contracting, with a five year
agreement to provide TigerAir Tiger Air with overnight base maintenance of its A320 fleet at Melbourne
International Airport and line maintenance in 3 states. Its MRO capability is a spin-off from its Defence
systems support experience maintaining over 200 ADF aircraft over the past two decades. It has CASA 145
accreditation for line maintenance up to and including A-checks for A319/A320/A321. Its capabilities
include aircraft modifications and integration, and AMO work across third-party platforms (BAE Systems,
2015a).
Broens manufacture ground support equipment for over 20 Defence forces globally; their main national
contribution however lies in manufacturing innovation. Their capability for large scale, high volume
production of precision machined components and assemblies is based on metrology and robotics, such
as the use of live turret CNC lathes, intelligent conveyors and in-process gauging (Broens, 2015).
Cobham is a global Defence and civilian contractor employing 1400 people in Australia and working across
charter, Fixed Base Operation, commercial aviation, helicopters and special missions. It provides all crew
and engineering support and services for QantasLink’s Jet operations in Australia, and operates freight
services for Australian Air Express. Its engineering specialisations include the operation, maintenance and
modification of jet, turbo-prop and rotary-wing aircraft and partnership with OEMs in sourcing parts. Has
design approvals for modifications of aircraft structures, systems, power plants, and electrical and
instrument systems; specialises in the design, installation and integration of high-tech avionic and mission
system solutions into complex air platforms, eg for aircraft search and rescue (SAR) and surveillance. Has
airworthiness authority clearances for ground test (e.g. electromagnetic capability) and flight test
programs. (Cobham Pty Ltd, 2015).
Levett Engineering is a precision manufacturer of machined components supplying Defence, Aerospace
(including BAE Systems), and the medical, electronics and commercial engineering sectors. With an
advanced manufacturing focus it has high level inspection capacity and fabrication and materials
treatment facilities to commercial and military standards, embracing parts assembly and component and
assembly painting and powder coating. It and has capabilities in management of projects and of local and
global supply chain (Levett Engineering, 2015).
TAE is a fully Australian owned provider of gas-turbine engine MRO services, as well as aerospace
engineering, advanced manufacturing, avionics, fuel and electrical component maintenance, aircraft
wheels & brakes and materials sales, with a large parts inventory, engine rental pool and asset base of
tooling and test equipment. Headquartered in Adelaide, it has workshops in four states. It services
regional airlines, business jet and aerial agricultural aircraft sectors as well as Australian and Southeast
Asian Defence Forces. A well as having CASA, FAA and EASA Part 145 and CASA Part 21M modification
design approvals, TAE is a recognised Defence AMO with capability to work on engines for the F/A-18
Hornet and Super Hornet, and is the designated Asia Pacific regional provider of MRO and upgrade for the
Pratt & Whitney F135 engine for the F-35 JSF. Through a relationship with OEM Honeywell, it has
diversified into work on army tanks (TAE, 2015).
234
2
Regional RPT Operator
1
GA Class A Operators
10
GA Class B Operators
2
Defence Contractor
13
3rd Party MRO
13
GA MROs
32
OEM
4
Education/Training*
Aviation Services
Manufacture
13
25
33
20
Total
170
1
1
1
1
1 Type
1
1
1
1
2
2
2
1
1
9
1
9
1
1
1
1
1
5
1 Type
2
2
3
2
1
5
1
1
8
1
1
3
1
2
16
15
1
1
1
2
1
6
1
3
2
1
1
6
13
10
2
1
13
5
15
1
5
14
4
2
170
20
10
15
2 Type
(*Not counting Kangan Batman, still listed on CASA website as a Part 147 Category training provider)
235
S21M
Design
Approval
Part 147
MTO
Other airlines
In-house/outsourced/off-shored
maintenance
In-house or outsourced
Also provides MRO service to other
operators
Component manufacturer/installer
Parts sourcing
Training/ simulation
Engineering design/testing
Integrated systems; custom
manufacture
Tied contractor to regional airline
Whole aircraft MRO
Component MRO
TLS for OEM
Component installation /
maintenance
Generalist aircraft MRO
Component MRO
Parts sourcing
Also an AMO
Provides TLS
Parts, equipment sourcing
Maintenance training organisation
GA flight training/ flying instructor
rating training
Component, tool supply/logistics
Aircraft sales/ leasing
Labour hire
Component manufacture/
installation
Tier1/2 supply chain, incl.
composites
Manufacture of tools, creation of
processes
Design, modification, approval,
testing
Regulation, audit
Aerospace training, R&D
Part 145
AMO
1
maintenance
Part 42
CAMO
1
AOC
Qantas
(International/Domestic)
Jetstar
Capability
Number
Total
Table A3.4 Aviation/aerospace cluster – Melbourne and environs (includes Avalon)
5
Victoria (Melbourne and environs) - Examples
Boeing Aerostructures Australia is the Boeing Company’s largest manufacturing footprint outside North
America, employing 1200 at Fisherman’s Bend and is Australia’s only designer and manufacturer of
structural composite components for commercial aircraft. Produces flight control surfaces for large
commercial aircraft using components, developed through co-location of R&D, design, testing, fabrication
and assembly activities. Core capabilities cover work in the areas of design, test, certification and
manufacture. As a Tier 1 partner to the Boeing 787 Dreamliner program, Boeing Aerostructures Australia
is the sole source supplier of 787 moveable trailing edges, comprising left and right hand inboard flaps,
flaperons, outboard flaps and ailerons. The 787 Dreamliner contract is Australia’s largest aerospace
contract, valued at $5 billion over 20 years. Boeing Aerostructures Australia is also the sole source of 737
ailerons, 747 moveable leading edges, and 777 cove lip doors, elevators and rudders. All production from
Boeing Aerostructures Australia is exported to the United States of America (Boeing Aerostructures
Australia, 2015).
Boeing Australia Component Repairs (BACR) at Tullamarine, incorporates the former Aerospace
Technologies of Australia Limited (previously Government Aircraft Factories), Commonwealth Aircraft
Corporation, and Hawker de Havilland. It is a large MRO employer with capabilities in composite, bonded
and metal structures, servicing both civilian and Defence aircraft, and links to the other Boeing
subsidiaries. BACR capabilities are said to include ready access to dedicated tooling, equipment and
processes, such as stocks of advanced composite materials, autoclaves, non-destructive testing
equipment, robotics (for example scanning hulls for flaws) and on-wing repair capability. It has the
advantage of links with Boeing Research & Technology-Australia, the logistics and parts supplier, and
Aviall and Boeing Defence Australia (Boeing Australia Component Repairs (BACR), 2015a, 2015b).
Marand Engineering – A privately owned Australian company with international clientele, supplying
industry with high-quality precision tooling, machine tools and highly engineered automated production
solutions. Experience in most key manufacturing industries including automotive, aerospace, defence,
mining, aviation, rail, food processing, white goods and general manufacturing. High ratio of engineering
and design staff and skilled, technical and production personnel, including tool-makers, machine tool
fitters and precision machinists. Marand ongoing commitment to training and apprenticeships. Supplies
precision airframe tooling on projects such as the Pilatus PC-9 turbo prop trainer, Boeing 737,747, 757 and
777 rudder and aileron programs, 787 Flaperon and Aileron programs, Airbus A330/340 undercarriage
doors and wing tip assemblies, British Aerospace Nulka electronic decoy (rocket) and McDonnell Douglas
MD Explorer helicopter. In Defence, has fabricated and machined complex shaped aluminium, steel &
invar lay-up mandrels and fixtures for the FA/18 E & F version Hornet fighter contract and has been a large
contributor of CS&E (control surfaces and edges) tooling to the F35 JSF program globally (Marand
Precision Engineering Pty Ltd, 2015).
Rosebank Engineering Australia —RUAG. A Swiss OEM, acquired Rosebank Engineering in Dec 2012,
taking over its 154 employees and gaining an Australian base for its Asia-Pacific activities (previously
Malaysia). Provides MRO for the RAAF. Acquisition provides platform for provision comprehensive lifecycle support out of Australia. RUAG provides MRO support to Swiss Defence Forces. Former name
retained in Australia; called RUAG offshore (Rosebank Engineering Australia, n.d.).
236
2
GA Class A Operator
15
GA Class B Operator
8
Defence Contractor
2
3rd Party MRO
9
GA MRO
33
Education/Training
4
Aviation Services
14
Manufacture
7
4
Total
101
3
3
3
3
2 Type
1
2
2
1
13
1
15
1
1
2
6
1
1
1
1
7
1
20
10
1
1
3
1
8
6
3
4
1
1
1
1 Type
1
1
2
1
1
1
3
1 Type
1
1
1 Type
1
3
2
1
1
3
1
1
101
237
1
S21M
Design
Approver
Regional RPT Operators
(incl Virgin subsidiary)
MRO
MRO
Uses tied maintenance contractor
In-house MRO
Also provides MRO services to other
operators
Buys MRO services
In-house MRO
Engineering design, testing
Integrated systems- logistics, design
Tied contractor to airline
Whole aircraft/ airframe MRO
Component MRO
Historical restorations
Whole aircraft/airframe MRO
Component MRO
TLS for OEM
Component supply/servicing
GA flight training
Aircraft sales/ leasing/ charter broker
Component manufacture/installation
testing, calibration
Audit
Part 147
MTO
1
Part 145
AMO
Jetstar
MRO
Part 42
CAMO
3
AOC
Network Aviation
(Sunstate) & Network
Turbine
Capability
Number
Total
Table A3.5 Aviation/aerospace cluster — Western Australia – All
29
6
13
5 Type
5
Western Australia - Examples
Fugro Spatial Solutions is a part of the Fugro NV group, with over 13,500 staff around the world. It
operates a large fleet of aircraft equipped with state-of-the-art remote sensing technology, servicing
natural resources management, urban planning, economic development, emergency response,
environmental, and engineering activities throughout Australasia and internationally. It appears to
purchase maintenance services from independent MROs (Fugro Aerospatial Solutions, 2015).
Aerospace NDI - Aviation support company founded in Perth in 1994 by an ex-Defence pioneer of non
destructive testing (NDT); now also overhauls aircraft wheels/brakes/undercarriages; manufactures NDT
reference standards and aircraft components, performs electroplating and painting of aircraft parts. CASA
Part 145 compliant (Aerospace NDI, Pty Ltd, 2015)
Heliwest offers charter and tourism, aerial, sling and medical work GA services across WA. It has an inhouse engineering section with CASA Part 145 authorisation, and carries out MRO work on rotary and
fixed wing single and multi-engine aircraft. It has a paint shop and staff licensed to work on airframe,
engine, electrical, instrument, radar, sheet metal and composites. It stocks Robinson, Bell and Eurocopter
parts and has a logistics service to source further parts (Heliwest Group, 20130).
238
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The Future of Aircraft Maintenance in Australia: Workforce

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